Public vs Private Credit
Obviously by nature private credit is going to be more resilient in a rising rate environment but curious as someone entering a career in public fixed income how the industry is positioned for this and whether or not rising rates as well as general shifts to PC could be a potential headwind?
Wouldn’t worry about it. Both paths have their pros and cons- think about it from an issuers perspective. Pros of a syndicated deal are cheaper price. Pros of a private credit deal are speed, certainty, and ability to handle complexity. Depends on what a certain issuer / sponsor is prioritizing - but can assure you cheaper debt will always be in demand
Both markets are here to stay as mainstream asset classes. Private credit is a lot more bubbly today so just recognize that there’s going to be a shakeout at some point if you’re looking into origination side of things (vs. distressed is opposite, forward outlook is strong). But the mainstay players like Ares will be fine.
These are quite different jobs so I would prioritize what type of work you are better suited for. Do you want to do investigative research and take contrarian views in the public market and follow earnings? Or do you want to execute deals and move onto next one? Do you want to get paid like a HF comp trajectory (public) or IB trajectory (private)? Both and pros and cons.
It would be a mistake to make career decision based on which market is growing *today*. Your success will come down much more to if you are strong investor within the chosen space.
Thanks so much for the reply. I think I definitely have more interest in the public side of things and uncovering value there. I do worry about the progression of active management/generally the stability, but I guess both of those risks are mitigated to some degree in fixed income?
Just to be clear, by public credit I am talking about L/S Credit and Distressed/Special Sits. Long-only HY at select shops like Artisan, PIMCO, Beach Point types work too if you want to optimize for stability and not max comp. If we’re talking like IG mutual fund, you should 1000% go into private credit instead.
None of these areas have passive pressure. HYG is a joke and easy to beat. That’s not the benchmark but more so relative performance against peer funds.
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