Trends Watch: May 31, 2018

May 31, 2018

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman. 

This week, Elana talks to Coleman Andrews, CIO & CEO, RMWC.

What is your outlook for private credit?

Various submarkets within private credit continue to expand, as significant numbers of borrowers have successfully accessed private credit markets over the past several years of the recovery cycle and are now looking first to private lenders rather than to banks.  We do not expect regulatory changes to have a near-term impact on this shift to private banking; rather, certain submarkets within private credit may become the primary source for financing.

What is your outlook for interest rates? 

We expect higher degrees of volatility.  History, particularly since World War II, leads us to conclude that the transition from zero-interest-rate policy to more normalized rates will include shocks and adverse surprises along the way.  Sound, conservative underwriting combined with structures that result in short-interest-rate duration will be critical differentiators between those who expand private capital and those who destroy it.

What keeps you up at night? 

Maintaining our discipline in underwriting is my core responsibility at this point.  Our secured bridge lending strategy has performed well in the up-cycle.  But it was constructed to outperform in the down-cycle.  Relentless execution of underwriting standards will end up being the central differentiator between winners and losers over a full market cycle. 

About Elana Margulies-Snyderman

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.