Morgan Stanley Mulls Doubling Private Credit Portfolio To $50 Billion

Morgan Stanley's asset management division aims to double its private credit portfolio to $50 billion in the medium term as it gathers funds from large investors to loan out to companies, Tatiana Bautzer and Saeed Azhar reported for Reuters.

Institutional investors such as sovereign wealth funds (SWFs) and insurance companies hold two-thirds of Morgan Stanely's current portfolio, and wealthy individuals account for the rest. I Photo: Morgan Stanley Facebook

The bank has invested more than $300 million into the business, which has already gathered about $25 billion in total assets from mainly institutional investors, David Miller, Morgan Stanley's global head of private credit and equity, told Reuters in an interview.

"The vast majority of new capital will continue to come over the next decade from our institutional clients," Miller said.

Institutional investors such as sovereign wealth funds (SWFs) and insurance companies hold two-thirds of the current portfolio, and wealthy individuals account for the rest, he said.

Miller estimates the broader private credit market has grown as large as $2 trillion.

The extension of private credit, of which direct lending is a key part, has increased since the financial crisis as stricter regulations made it more expensive for banks to finance risky loans for debt-ridden companies.

Activity has surged in the last two years. As banks' capital got tied up in risky loans and interest rates rose, groups of banks were able to provide less financing via traditional syndicated loans. Private lenders such as Ares Management, KKR, and Blackstone swept in.

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