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Growth, Resilience, Returns

Private credit has seen substantial growth over the past decade, establishing itself as an important and expanding part of investor portfolios, with global private credit assets under management (“AUM”) growing to c.$1.7Tn in 2024 from c.$260Bn in 2008.1

As a sub-segment, European private credit has firmly established itself as a compelling and potentially attractive market in its own right, with AUM now approaching $500Bn. Growing nearly 2x faster than its U.S. counterpart, it has now expanded to represent approximately 30% of the global private credit market.2

In an environment of elevated macroeconomic and geopolitical uncertainty, ever increasing banking regulations, and a possible end to “American Exceptionalism,” European private credit offers a compelling diversification opportunity.

U.S. investors allocating to European private credit are not required to sacrifice return potential. Capital deployed in European private credit could offer higher average credit spreads while retaining the benefits of the U.S. dollar (“USD”) base rate through currency hedging. Moreover, European investors can allocate to their domestic markets and protect themselves from potential USD depreciation.

Through a comparative lens of European and U.S. private credit markets, this publication seeks to highlight how combining U.S. and European private credit allocations enhances diversification, resilience and return potential for investors.

For the Full Paper, Click on the Link Below.

Morgan Stanley Private Credit

Morgan Stanley Private Credit invests in first and second lien debt; unitranche loans; mezzanine debt; and equity co-investments alongside controlling shareholders to support middle-market companies based in North America and Western Europe. The team seeks to create value as a long-term partner for owner-operated and private equity-backed businesses.

The Author

Important Information:

1 Preqin – Global Private Credit Assets Under Management (“AUM”). Private Credit AUM encompasses the following strategies: (i) Direct Lending; (ii) Mezzanine; (iii) Special Situations; (iv) Distressed; (v) Fund of Funds; and (vi) Venture Debt. AUM is calculated as the sum of total dry powder and unrealised value. Data through to September 2024 (accessed June 2025).

2 Ibid.

Diversification does not eliminate the risk of loss.

The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) and its subsidiaries and affiliates (collectively the Firm”), and may not be reflected in all the strategies and products that the Firm offers.

This material is for the benefit of persons whom the Firm reasonably believes it is permitted to communicate to and should not be forwarded to any other person without the consent of the Firm. It is not addressed to any other person and may not be used by them for any purpose whatsoever. It expresses no views as to the suitability of the investments described herein to the individual circumstances of any recipient or otherwise. It is the responsibility of every person reading this material to fully observe the laws of any relevant country, including obtaining any governmental or other consent which may be required or observing any other formality which needs to be observed in that country. Unless otherwise stated, returns and market values contained herein are presented in US Dollar.

This material is a general communication, which is not impartial, is for informational and educational purposes only, not a recommendation to purchase or sell specific securities, or to adopt any particular investment strategy. Information does not address financial objectives, situation or specific needs of individual investors.

Any charts and graphs provided are for illustrative purposes only. Any performance quoted represents past performance. Past performance does not guarantee future results. All investments involve risks, including the possible loss of principal.

Prior to making any investment decision, investors should carefully review the strategy’s relevant offering document. For the complete content and important disclosures, refer to the article’s PDF