Direct lending continues to expand across Europe as institutional and sophisticated high-net-worth investors recognize the attractive opportunities available. Demand for private credit, and specifically middle market direct lending, is growing faster than supply, prompting investors to look beyond their domestic markets.
This paper outlines why a complementary allocation to U.S. middle market direct lending may enhance portfolio diversification, and potential returns.
The European market is maturing and offers investors a growing selection of deals. However, by also allocating to U.S. direct lending, investors can benefit from:
– A broader and deeper opportunity set
– Higher spreads and more attractive terms
– Greater idiosyncratic deal flow
– Diversification that complements their existing European allocation
In private markets, timing matters and opportunities emerge when uncertainty is high. Adding U.S. direct lending exposure positions investors to capture attractive returns across a resilient and dynamic segment of the world’s largest economy.
Principal Asset Management
