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RCFs an emerging asset class in private credit

12 April 2024

    Revolving Credit Facility (RCF) - potentially emerging asset class in private credit

    Institutional investors can now access bank-originated assets like Revolving Credit Facilities (RCF) and Net Asset Value (NAV) financing, with potential for portfolio diversification and enhanced returns.

    • RCFs offer a potentially resilient credit profile tested through the cycle
    • Historical European RCFs drawing levels have remained stable through cycles
    • RCFs’ returns can have lower exposure to interest rate risk than comparable strategies
    • Potentially a large scale deployment opportunity in the sub-investment grade RCF

    In our view, the RCF asset class has the potential to become a large and fast-growing private credit vertical, with ~$20BN private equity-backed corporate RCFs refinanced in Europe every year on average. Market structure changes and an evolving bank regulatory environment are likely to further support this trend, providing investors large, scalable and potentially attractive deployment opportunity while supporting real economy businesses.

    Download the full report PDF, 2.14MB