Blackstone has attributed its biggest fourth-quarter gains to the private credit market, citing a 0.3 per cent default rate.
During an interview with Bloomberg in Tokyo last Thursday, Blackstone chief executive officer Steve Schwarzman said he was unaware of any bank that could claim a lower default rate.
“I have quite good confidence in our ability to do conservative credit extension,” he said, and pledged that the asset manager’s own direct-lending business would come out of the current economic cycle in a “very strong position”.
Read more: Blackstone sees growth in private credit funds in fourth quarter
The $1.7trn private credit market boomed after the financial crisis, which led to greater restrictions on bank lending. However, its rapid expansion has brought it under more scrutiny with some warning of a potential bubble.
UBS Group AG chairman Colm Kelleher was among those that have warned of a bubble, while others have raised concerns over flawed valuations.
Schwarzman however seems to have full confidence in the asset class. He went on to tell Bloomberg that the investment firm is eyeing expansion in Japan, with plans to acquire businesses in the Japanese healthcare and real estate spaces this year.
Read more: Private credit firms circle Barings’ loan book
The company has also exported its investment products to retail investors in Japan, partnering with local securities firms so that individuals can invest in the company’s private credit, private equity and real estate businesses.
“The world has concluded that something has changed in Japan in a positive way,” Schwarzman told Bloomberg. “And I agree with that.”
Blackstone’s latest financial results showed 3.9 per cent growth in the value of its private credit funds over the last three months of 2013, bringing the full-year performance to 16.4 per cent.
In contrast, its real estate division lost value. Opportunistic real estate lost 3.8 per cent in the fourth quarter, bringing the full-year decline to 6.3 per cent.
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