Private Credit’s Other Lanes Still Offer Value with Lotfi Karoui

Mar 17, 2026

Lotfi Karoui, PIMCO managing director and multi‑asset credit strategist with prior Goldman Sachs experience and a financial economics background. He traces direct lending’s rise since the GFC and its boom after COVID. He discusses why recent private credit headlines appeared, how private credit overlaps with syndicated and high‑yield markets, and why asset‑based finance and other niches may offer diversification.

Ask episode

AI Snips

Chapters

Transcript

Episode notes

INSIGHT

Direct Lending Grew To Fill A Banking Gap

Direct lending exploded after the global financial crisis as banks retrenched and public market entry barriers rose, creating a supply gap for leveraged loans.
Lotfi: AUM jumped from $37bn in 2009 to nearly $1tn today, driven by sponsor LBO activity and regulatory change.

INSIGHT

Too Much Capital Eroded Direct Lending Standards

Rapid inflows into direct lending created imbalances and loosened underwriting as capital chased deals, reducing the premium available.
Lotfi highlights recent vintages post-2022 show lower underwriting standards amid excess capital deploying into larger $1bn+ deals.

ADVICE

Rethink Illiquidity When Allocating To Private Credit

Reevaluate illiquidity risk and compensation in private market allocations instead of assuming low volatility persists.
Lotfi advises investors will rethink how much illiquid private credit they hold after opacity and redemption pressures surfaced.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

Lately, private credit has attracted its share of grim headlines, but as Lotfi Karoui — PIMCO Managing Director, Multi Asset Credit Strategist and Co Head of Client Solutions and Analytics — points out, many recent developments in the space should be seen as expected features of a cyclical credit market.

In his debut appearance on Accrued Interest, Lotfi and host Greg Hall dig into the private credit story: from direct lending’s emergence after the Great Financial Crisis, to its explosive growth post-COVID, and what we can expect in the future as investor expectations realign to actual opportunities and risks. They also explore diversification options within the private credit landscape, including asset-based finance (ABF) and real estate.

Join us in welcoming Lotfi to PIMCO and Accrued Interest.

Show notes:

(3:50) The emergence of direct lending after the Great Financial Crisis (7:26) The explosive growth of direct lending post-COVID (15:29) Why are we seeing headlines about private credit? (18:50) The spectrum of credit markets (28:16) Private credit’s other lanes (34:52) Where are we on the asset-based finance journey? (38:50) Systemic vs. cyclical risks in private credit (46:10) What are senior secured loans?
If you enjoyed the episode, explore more of our resources below: Private Credit’s Other Lanes Still Offer Value

Related Episodes:

Apple: • Asset-Based Finance: New Frontiers in Private Credit • Will Headlines Hit Your Bottom Line? Risk and Reality in Today’s Credit Markets

Spotify: • Asset-Based Finance: New Frontiers in Private Credit • Will Headlines Hit Your Bottom Line? Risk and Reality in Today’s Credit Markets

The discussion and content provided within this podcast is intended for informational purposes only and may not be appropriate for all investors. Reliance upon information provided in a podcast is at the sole responsibility of the listener. The information included herein is not based on any particularized financial situation, or need, and is not intended to be, and should not be construed as, a forecast, research, investment advice or a recommendation for any specific PIMCO or other security, strategy, product or service. Past performance is not a guarantee of future results. All investments contain risk and may lose value. Investors should speak to their financial advisors regarding the investment mix that may be right for them based on their financial situation and investment objective. Podcasts may involve discussions with non-PIMCO personnel and such content contain the current opinions of the speaker but not necessarily those of PIMCO. Other podcasts may consist of audio recording of an existing PIMCO article and such material contains the current opinions of the manager. The opinions expressed in all podcasts are subject to change without notice. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized. For additional important information go to www.pimco.com/gbl/en/general/legal-pages/podcast-disclosures