Bank Partnerships Will Reshape Who Wins Private Credit Deals

What's New

Private credit lenders tied to bank franchises will win the best large-borrower deals, because borrowers now expect more than capital. Taylor Boswell, Head of Credit Origination and Research at AGL Credit, argues this in an interview on the InsuranceAUM.com Podcast. He says convergence between broadly syndicated loans and private credit starts with borrowers. They want the best-fit capital and care little which market supplies it. Those borrowers lean on a small circle of trusted banks for advice, hedging and financing. A lender inside that circle sees deals earlier and can pick the best of them. Allocators should ask managers how they source deals as well as how they underwrite them.

Why It Matters

Boswell recalls that lenders of his generation spent 10-plus years saying private credit worked because the banks were absent. He says that view implied banks would be good at it if they came back. Standalone direct lenders, which he calls monoline providers of a single financing solution, face the pressure. He points to large asset managers that once dismissed the bank model and now form their own bank partnerships. AGL holds an exclusive, long-term private credit partnership with Barclays, so the argument supports its own model.

By The Numbers

• $75 million: The EBITDA floor of the convergence zone, which reaches multiple hundreds of millions for borrowers able to use both markets.

• $1.5 trillion: The approximate size of the broadly syndicated loan market, with direct lending approaching or just exceeding that scale.

• About 20: bank private credit initiatives announced over the last half decade, by Boswell's count.

• 3 to 6 banks: The trusted network a borrower's CEO and CFO keep close for cash management, hedging, M&A and financing.

Memorable Quotes

• "Borrowers just want to access the best fit capital for them." It places the borrower at the center of the convergence argument.

• "It's not happening at the asset manager level, it's not happening at the limited partner level, it's happening at the borrower level." He locates the source of convergence with the companies raising debt.

• "We're not suggesting that Rome will be built in a day, but we are suggesting that there's a meaningful change in the competitive dynamics of the private credit markets that is underway." He concedes the shift is gradual while still calling it underway.

• "Having a better product is what allows you to both see more investments, but also to consistently choose the best ones out of that pipeline." He links the broader bank offering to better deal selection for investors.

The Wrap

The argument stays true while borrowers keep weighing advice, hedging and delayed-draw structures alongside price. It also needs bank-linked lenders to turn early access into lower realized losses. It breaks if borrowers go back to choosing lenders mainly on leverage and spread. It also breaks if standalone direct lenders match bank sourcing through scale alone. Boswell says the fifth year of a generic five-year cycle separates credit managers, so the next downturn will settle it.