Key Takeaways
- • U.S. Bank's Hugo Smyth, vice president of business development for U.S. Bank Global Corporate Trust, says private credit remains a core funding source for borrowers and lenders despite higher interest rates since 2023.
- • Citing S&P Global Ratings, private credit assets under management have quadrupled over the past 10 years, a growth trend the article expects to continue.
- • Rising sizes of private credit club deals are allowing direct lending funds to finance loans once limited to the bank syndicated market.
- • Third-party facility agent and security trustee roles are expanding as sponsor-led direct lending funds replace banks as sources of long-term lending.
- • U.S. Bank positions itself as a highly rated, non-competitive agent with no lending, arrangement or advisory role in Europe and no PE sponsor ownership.
Summary
Higher interest rates have weighed on European borrowers, but according to U.S. Bank, the appeal of private credit remains stronger than ever. Hugo Smyth, vice president of business development for U.S. Bank Global Corporate Trust, said that 2023 pressured borrowers as markets moved into a higher-rate environment, yet borrowers and lenders remain willing to use private credit as a core funding source. He said the market continues to expand in 2025, with average transaction sizes rising and lenders tapping the market to grow their own funds and launch new direct lending funds.
Citing S&P Global Ratings, the article notes that private credit growth was spurred by more than a decade of easy money and a search for yield, and that assets under management have quadrupled over the past 10 years. The article expects continued growth, with bank restrictions on lending from ongoing risk and regulatory requirements expected to push more activity toward direct lenders.
A notable trend is the increasing size of private credit club deals among direct lending funds. Smyth said this has allowed lenders to finance loans originally open only to the bank syndicated market. Since the financial crisis, banks have faced tighter constraints on how much they lend, to whom, and on what terms, opening room for new entrants. Smyth said credit funds can offer greater flexibility, including closer client relationships, more detailed credit analysis, and faster due diligence in the right circumstances.
The shift from banks to direct funds has also created a market for third-party agents to act as facility agent and security trustee for sponsor-led, or private-equity-led, direct lending funds. Smyth argued that an agent with no conflicts of interest on the lending side or through PE-sponsor ownership gives all parties peace of mind, particularly if problems arise.
The article presents U.S. Bank as a suitable partner for direct lending, citing its high credit rating, absence of lending or advisory activity in Europe, and lack of PE-sponsor ownership. The institution is an active member of the Loan Market Association and describes itself as a leading CLO and credit fund loan administrator. Services listed include loan document review, tailored loan statements, cash flow monitoring, waterfall calculations, borrower compliance reporting, hedging monitoring, and maintenance of loan records. Note that the article is promotional content from U.S. Bank.
Citing S&P Global Ratings, the article notes that private credit growth was spurred by more than a decade of easy money and a search for yield, and that assets under management have quadrupled over the past 10 years. The article expects continued growth, with bank restrictions on lending from ongoing risk and regulatory requirements expected to push more activity toward direct lenders.
A notable trend is the increasing size of private credit club deals among direct lending funds. Smyth said this has allowed lenders to finance loans originally open only to the bank syndicated market. Since the financial crisis, banks have faced tighter constraints on how much they lend, to whom, and on what terms, opening room for new entrants. Smyth said credit funds can offer greater flexibility, including closer client relationships, more detailed credit analysis, and faster due diligence in the right circumstances.
The shift from banks to direct funds has also created a market for third-party agents to act as facility agent and security trustee for sponsor-led, or private-equity-led, direct lending funds. Smyth argued that an agent with no conflicts of interest on the lending side or through PE-sponsor ownership gives all parties peace of mind, particularly if problems arise.
The article presents U.S. Bank as a suitable partner for direct lending, citing its high credit rating, absence of lending or advisory activity in Europe, and lack of PE-sponsor ownership. The institution is an active member of the Loan Market Association and describes itself as a leading CLO and credit fund loan administrator. Services listed include loan document review, tailored loan statements, cash flow monitoring, waterfall calculations, borrower compliance reporting, hedging monitoring, and maintenance of loan records. Note that the article is promotional content from U.S. Bank.
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