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  "documentTitle": "Private Credits Next Act",
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  "authorName": "Oliver Wyman",
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  "notes": "The slide uses a historical timeline diagram to illustrate waves of bank disintermediation.",
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      "text": "So, have we reached peak private credit? The history of banking suggests that, on the contrary, another wave of bank disintermediation is likely.",
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      "text": "Exhibit 1: Waves of bank disintermediation",
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      "text": "bank share of private lending: 35%",
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      "text": "The shift of lending away from banks has a long history. Astonishingly, bank lending as a share of total borrowing has been falling for 50 years. The 1973-1974 inflation and interest rate shock created more profound disintermediation from banks than the rise of private credit today, as investment grade companies switched to borrowing from the market via commercial paper and bonds.",
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      "text": "In the first quarter, 28 companies arranged bank loans to refinance $11.8 billion of debt that was previously provided by private credit firms, according to PitchBook data. Put another way, banks have been able to claw back just over half of the $20 billion that shifted in favor of private credit firms in 2023. So, have we reached peak private credit? The history of banking suggests that, on the contrary, another wave of bank disintermediation is likely.",
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      "text": "The rise of high yield bonds in the 1980s was another large wave, as were the various advances in securitization, each enabling more borrowers to bypass banks. And since 2008, mid-market corporates and mortgage borrowing have increasingly moved away from banks. In all, banks' share of private lending in the US economy has fallen from 60% in 1970 to 35% last year, according to a new National Bureau of Economic Research paper (See Exhibits 1 and 2).",
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      "text": "Private credit firms have enjoyed a \"golden moment,\" as Blackstone president Jonathan Gray put it last year, while banks have been on the back foot from the sharpest increase in interest rates in 45 years. In 2023, these non-bank lenders funded a whopping 86% of leveraged loans, up from 61% in 2019, according to PitchBook LCD. But one year on from the failures of Silicon Valley Bank and Credit Suisse, the strongest banks are ramping up their lending into the broadly syndicated bank loan markets — a key way to finance leveraged buyouts.",
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      "text": "Private credit firms have enjoyed a \"golden moment,\" as Blackstone president Jonathan Gray put it last year",
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      "text": "Source: Oliver Wyman analysis",
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