Morgan Stanley: The good, the bad and the ugly in private credit PIK deals

The Punchline

Morgan Stanley's David Miller discusses the current state of private credit, particularly highlighting the increasing trend of interest payment deferrals in PIK (Payment-in-Kind) deals. He emphasizes that Morgan Stanley manages to keep these deals below 3% in their direct lending portfolios, indicating a careful approach to risk management.

Why You Should Read This

The insights from David Miller provide valuable perspectives on risk management in PIK deals, which are critical for understanding the dynamics of private credit investments amidst rising payment deferrals.

Who This Is For

This article is targeted at institutional investors, credit analysts, and private equity professionals interested in private credit markets and performance metrics.

Investor Implications

Investors should consider the implications of increasing interest payment deferrals on credit risk and portfolio management strategies. The cautious limit of PIK exposure by Morgan Stanley serves as a benchmark for assessing risk in similar investments by other asset managers.