The Bridge Ep. 13: Good Credit Holds. Bad Credit Breaks

Summary

In this episode, Sonali Basak speaks with Vivek Bantwal about what recent stress in private credit does—and does not—mean for the asset class. Bantwal says the market is becoming more selective, with stronger borrowers, better documentation, and tighter underwriting standing out from weaker credits. He emphasizes that much of the current turbulence is technical, driven by capital flows and redemption pressure, rather than a broad fundamental breakdown. He also explains Goldman Sachs’ private credit positioning, including its long operating history, diversified origination engine, and relatively small traditional retail evergreen exposure. Looking ahead, he sees continued growth in private investment grade and asset-based finance, alongside more use of continuation funds, hybrid capital, NAV loans, and other tools to bridge the exit gap.

Notes

• Goldman Sachs private credit is framed as having 30 years of cycle experience, which shaped a cautious approach to retail inflows.
• Goldman’s private credit AUM is described as about $180 billion.
• The portfolio mix is 83% institutional drawdown funds and 17% evergreen vehicles.
• Within evergreen, two-thirds comes from the private wealth channel and roughly one-third from traditional retail.
• Traditional retail exposure is kept around 5% to 6% of the platform.
• Bantwal argues evergreen capital can force faster deployment and poorer deal selection if sized too aggressively.
• He says growth in evergreen products must be matched to origination capacity.
• Goldman’s origination is supplemented by the broader Goldman Sachs ecosystem rather than relying only on the private credit team.
• The platform has over 260 investment professionals.
• The team covers about 300 private equity firms.
• Goldman’s investment banking division adds 3,000 bankers and coverage of 13,000 corporates.
• Direct lending is still primarily sponsor-driven, but corporate and private-wealth-sourced borrowers are becoming part of some strategies.
• The episode treats AI disruption as a real underwriting variable in software credit.
• Goldman says it has dedicated software investors with decades of experience.
• He draws a sharp line between sticky enterprise software and vulnerable point solutions.
• Horizontal, non-verticalized point solutions are seen as more exposed to AI disruption.
• The public software index is down 30-plus percent from its peak.
• Credit is showing dispersion rather than a uniform repricing across software names.
• Top software leveraged-loan names are down less than 1%, while other names are down 15% or more.
• Software credit spreads are widening and documentation is tightening.
• Refinancings may include more amortization than before.
• The 2019 to 2022 private equity vintages have been held for a long time and show weak DPI versus historical cohorts.
• LPs are pushing for distributions heading into 2026 and 2027.
• The exit toolkit is broadening beyond strategic sale, IPO, and sponsor-to-sponsor transactions.
• Continuation funds are increasingly part of the capital-raising toolkit.
• Hybrid capital, NAV loans, and fund finance are being used as bridge solutions.
• Bantwal says good companies can still raise capital, even if the capital structure changes.
• He argues the current period is more technical than fundamental so far.
• Capital flows, not just borrower quality, are driving the current repricing.
• The pending stress wave is tied to 2026 and 2027 refinancing outcomes.
• He says underwriting should focus on preparation rather than prediction.
• Stress testing and downside modeling are presented as core underwriting disciplines.
• The firm’s PIC portfolio is described as highly concentrated in better-quality picks.
• Only one of about 184 companies is in the bad-pick or restructuring bucket.
• Investors are told to separate technical dislocation from fundamental credit deterioration.
• The current market structure is still illiquid, even if evergreen products offer interim liquidity.
• Goldman avoids the label “semi liquid” for evergreen products.
• The liquidity promise is best-efforts rather than full liquidity.
• The private-to-public credit premium is part of the asset class’s economics.
• Private investment grade is identified as a major growth area from here.
• Asset-based finance is another growth lane alongside private IG.
• The private-placement market for private IG is already about $1 trillion.
• He cites a $6 trillion-plus addressable market for non-bank liquidity providers and insurers in asset-based finance.
• Some estimates for AI-adjacent capex and infrastructure financing are in the double-digit trillions.
• Private credit’s value proposition is customization plus a spread premium over public markets.
• The episode places private and public credit on a continuum rather than as separate silos.
• The outro identifies Bantwal as co-head of private credit at Goldman Sachs.