Golub Is Building Out Trading Desk for Private Credit Loans
Direct lender traded over $1 billion of the debt in first half
Distress to hasten secondary trading, Monarch’s Santana says
By Ellen Schneider, Libby Cherry, and Kat Hidalgo
Golub Capital is boosting its trading of private credit deals, according to people familiar with the matter, the latest evidence of growing interest among some industry players in developing a secondary market for direct loans.
The firm traded about $1 billion of private debt through the first half of the year, the people said, asking not to be named because they’re not authorized to speak publicly. Industry insiders broadly say Golub is among the most active participants in the space, which includes the likes of JPMorgan Chase & Co. and others.
The buying and selling of loans remains relatively rare in the $1.7 trillion private credit market, where most lenders typically hold debt until maturity. Still, there are signs that transactions are picking up as investors seek the ability to swiftly enter and exit positions, be it due to liquidity constraints or a desire to free up capital for new investments. In some cases, it can offer opportunities to offload more stressed credits. JPMorgan recently sought to broker trades in the debt of Pluralsight Inc., a struggling workforce development company, Bloomberg reported.
“Private credit has proliferated, it’s become so big that it’s rivaling the broadly syndicated market — you’re going to see some trading, people looking for liquidity and to de-risk,” said Chris Santana, co-founder of Monarch Alternative Capital, a credit investment firm that focuses on purchasing debt on a secondary basis.