Although private credit remains all the rage with investors (and asset managers thirsty for fee-rich, flow-strong businesses), there is chatter that there’s a decent amount of quiet extending-and-pretending now going on.

One important difference between private credit and the public high-yield bond universe is that the former pays fixed coupons, while the latter is floating rate debt, with the interest payments ebbing and flowing with interest rates.

Rising rates help private loan returns — up to a point. Paying out SOFR/LIBOR plus, say, 500 basis points is a lot easier when rates were floored, and many more leveraged companies are now probably struggling to service their debts. Some investors say that private credit firms are therefore amending and extending some dicier loans, hoping for some respite in 2024.