Private credit’s new frontier: innovation, liquidity, and resilience
Marianne Zangerl shares her expert perspective on the fast-changing world of private credit, offering practical insights for institutional investors navigating this dynamic asset class.
Duration: 3 Mins
Date: Oct 28, 2025
Beyond direct lending: exploring new horizons
Private credit is no longer confined to the familiar territory of mid-market direct lending. As the sector matures, investors are venturing into new segments, such as investment-grade private credit, asset-backed lending, shipping finance, and fund finance.
Reflecting on current trends, Marianne Zangerl notes that investors are increasingly seeking opportunities beyond direct lending in the private credit space. This expansion is accompanied by the rise of innovative fund structures, which open the doors to high-net-worth and even retail investors.
“Different fund structures allow for more high-net-worth investors and even retail investors to access private credit. We expect this trend to grow over the next few years.”
Liquidity without sacrifice: smart structures for volatile times
Liquidity is a perennial trade-off for private credit investors, and it comes into focus when markets turn turbulent. Zangerl is forthright about the risks of forced asset sales:
“We don't aim to sell private assets to provide liquidity. You can face deep discounts if you are a forced seller. We look for other ways to add liquidity to the fund structure.”
Building resilience: underwriting, monitoring, and covenant discipline
In an environment where economic cycles can turn quickly, robust underwriting and vigilant monitoring are essential. When we underwrite a transaction, we aim to do so throughout the cycle. We look at what could cause a loan to go wrong, and then we aim to structure and protect against those outcomes. Ongoing monitoring is just as critical as origination. If we can see those early warning signs, we can work with borrowers before the default happens.
Covenant erosion remains a hot topic, especially in competitive or heavily banked markets. But as a non-bank lender, we are not under the same pressure. In competitive bidding, we maintain a hard line. If the covenants don't work for the transaction, and they're not appropriate, then we simply won't proceed.
Sourcing, diversification, and regulatory mastery: the institutional edge
A well-balanced portfolio starts with a broad origination funnel and rigorous filtering for pricing, credit quality, and covenant strength. Diversification is incredibly important when we're constructing any kind of portfolio. Some of the factors we analyse during the filtering process include: our exposure to other industries and different types of borrowers, whether the debt is secured or unsecured, and whether we’re lending to the parent company or the operating one. We also ensure that we stagger maturity dates across the portfolio.
Commenting on sourcing, Zangerl says:
“Our advantage lies in our willingness to pursue small- and mid-sized borrowers, where competition is less intense and where pricing is more attractive.”
Our client base is diverse – insurance companies, family offices, and pension funds – and that demands regulatory agility. We have a big book of insurance clients where the regulations are stringent. We have to ensure we're keeping up to date with all the latest regulations in the market and making sure that the transactions that we're pursuing work for those clients.
Transparency is paramount, and Aberdeen Investments has a long history of providing tailored reporting for insurance clients. We work closely with investors to identify the information they require and ensure full compliance.
Stress testing and the road ahead: staying prepared for uncertainty
Stress testing is an integral part of risk management. While private credit data is less transparent than public markets, default studies indicate benign outcomes in investment-grade and asset-backed strategies.
“When you look at the investment-grade part of the market, which is backed by physical assets, the default data is fairly benign. In areas like fund finance, we've never had a default”, Zangerl reassures.
Final thoughts…
Marianne Zangerl’s insights highlight the importance of innovation, discipline, and adaptability in private credit investing. For institutional investors, success in this evolving landscape will depend on thoughtful portfolio construction, rigorous risk management, and a willingness to embrace new opportunities while safeguarding against emerging risks.
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