“The dispersion in performance is becoming more visible, certainly to institutional investors,” says James Reynolds, global co-head of private credit at Goldman Sachs, on the latest episode of the Credit Exchange podcast with Lisa Lee.

“It’s clear, as you travel the world and speak to LPs, that there is a flight to quality happening. There is a flight to quality and scale,” he says.

The headlines around private credit are focused mainly on BDCs, which accounts for $400bn of the asset class and is located in the US. The distribution yields have come down, Reynolds notes, but they were perhaps inflated since, over the course of 2022 and 2023, interest rates went from zero to 5%. When the market dislocates, you tend to earn excess yield.

And there’s also momentum with institutional investors, who understand this is a pretty interesting moment to step into these markets, Reynolds says.

He sees opportunities “everywhere” – in direct lending senior, direct lending junior, capital solutions, anything around infrastructure, ABF, structured IG, and single-name corporate IG private. The first quarter of this year was the busiest ever for Goldman’s private credit team, and Reynolds expects the rest of the year to be busy as well.