Barclays: The macro concerns surrounding private credit seem to be largely exaggerated.

Barclays' Corry Short and Dominique Toublan believe that the macro concerns surrounding private credit appear to be somewhat overblown. These strategists stated in a report that this alternative asset class is often described as the next potential detonator in the financial markets, but the size of the market itself does not necessarily imply systemic risk. Private credit is typically held by long-term allocators, and retail exposure is limited to investment tools with clear safeguard mechanisms. This reduces the likelihood of sudden sell-offs exacerbating broader financial contagion. They also added that lending institutions and insurance companies with exposure to private credit have cushions in place and are less likely to incur losses automatically due to pressure within this asset class. Barclays believes that a higher exposure to the software industry could be the next test for underwriting discipline in private credit, but any adjustments, such as reduced allocations, are likely to be gradual.