Agefi Luxembourg - mai 2026

AGEFI Luxembourg 24 Mai 2026 Fonds &Marchés Whatstructurallyhigherrates,globalfragmentation, product design and digital infrastructure mean for private creditmanagers? P rivate debt emerged fromthe postfi­ nancialcrisis period as a powerful substitute for usual lending, growing into a $3.5tn asset class inunder two decades (Aima, De­ cember 2025). Today, that growth story is entering amore selective phase. Higher interest rates, per­ sistent inflation and geopolitical fragmentationhave ended the era of uniformly supportive conditions. Market stress is reappearing in le­ veraged and cyclical segments, while structurally defensive strategies (nota­ bly infrastructure anddigital assets) conti­ nue to attract capital. The result is not systemic distress, but increasing dispersion across private credit. Higher interest rates: a pause, not a return to the past TheUSFederal Reserve’s early2026pause leftpolicy rates in the 3.50% 3.75% range, (CNBC, April 2026) but expectations of a quick return to prepandemic monetaryconditionshavelargelyfaded.Geopolitical tensions andrenewedenergypricevolatilityhave re­ vived inflation uncertainty, reinforcing higher struc­ turalfundingcosts.Forprivatecredit,theimplications are mixed. Floating rate assets continue to benefit from elevated base rates, while leverage dependent strategies face tighter interest coverage and growing refinancing risk. Rate normalization, once seen as cyclical, is increasingly beingpriced as structural. Inflation: persistent pressures andwidening dispersion Inflationhasmoderated following theextremepeaks of 202223 but remains sticky relative to the previous cycle.Fragmentedsupplychains,volatileenergymar­ ketsandsustainedcapitalexpenditure(particularlyin digital and power infrastructure) are keeping cost pressures elevated. For debt fund managers, this re­ inforcesdispersion.Whileinflationsupportsheadline yields infloating rateportfolios, it simultaneously in­ creases borrower stress, especially where pricing powerisweakorcapitalstructuresareinflexible.Per­ formance differences within private credit are there­ fore becomingmore pronounced. Geopolitics: fragmentation as a permanent feature Geopoliticshasreenteredmarketsasastructuralvari­ able.InMarch2026,awidelyusedgeopoliticalriskin­ dicatordescribedtheenvironmentas“extraordinary”, citingacceleratedfragmentationoftrade,capitalflows and strategic alliances. Thedefiningfeatureisnotonlythescaleofshocks,but their speed of transmission through energy prices, supplychainsandinvestorsentiment.Properlystruc­ tured private assets remain relatively insulated from short termvolatility,reinforcingtheroleoflong dated, illiquiddebt strategies. Atthesametime,deglobalizationisgeneratingfinanc­ ing demand. Onshoring, defense investment and energy security projects require longduration, proj­ ectbasedcapital,whichisanaturaldomainforprivate debt, particularly infrastructure lending. Market structure: a bifurcating asset class and the evergreen test Themacroeconomicandgeopoliticalbackdropthere­ fore is accelerating a clear bifurcation within private credit. Senior secured infrastructure debt backed by regulated or contracted cash flows operates under a fundamentally different risk profile fromunitranche lending to leveraged buyouts, despite sharing the same assetclass label. Differences in cashflow visi­ bility, recovery values and refinancing sensitivity are becomingmore pronounced as funding costs rise. This divergence has been reinforced by the rapid ex­ pansionofsemiliquid,openendedvehicles.Accord­ ing to MSCI, strong inflows into these structures reflected managers’ efforts to widen access beyond traditional institutional drawdown funds. Their de­ sign (offering simplified entry andperiodic redemp­ tionwindows)reshapedtheinvestorbase,particularly in thewealth channel. Redemptionpressure in late 2025andearly2026, re­ ported by the Financial Times, tested these formats. Gating mechanisms and redemption limits func­ tionedasintendedbutalsoexposedastructuralchal­ lenge:amismatchbetweenlongdated,illiquidassets and investor expectations of liquidity. In stressed conditions, such mechanisms can delay with­ drawals, amplifyconfidenceeffects and, at the margin, increase the risk of un­ timely asset sales. As a result, investors are increas­ ingly reassessing structure along­ side manager quality. Gated vehicles, runoff models and rolling vintage funds embed materially different liquidity and valuation dynamics. In longduration strategies such as infrastructure debt, the alignmentwithassetlifeispart of a good risk management, and it is becoming an increas­ ingly important consideration in fund selection rather than a tech­ nical feature. AI Infrastructure andPrivateCredit: Opportunities and risks AIfueled rapid growth in demand for data centers, cloud infrastructure and digital networks has been a positivecatalystagainstthissluggishmacroeconomic picture, triggering a capitalintensive investment boom especially in the US. These capital assets need to be built out on a longterm basis and naturally alignedwithprivate credit financing.As a result, pri­ vate credit managers are playing an increasingly prominent role in funding datacenter development and related infrastructure, often at attractive spreads, supported by strong borrower demand and long­ term structural tailwinds. That opportunity is, how­ ever, notwithout risks. AIinfrastructureisenergyintensiveandhighlycom­ plex, with performance closely tied to power avail­ ability, gridconnectivity, executionriskand the speed of technological change. Recent market data under­ scorestheseconstraints:atleast48datacenterprojects, representing more than $150bn of investment, were blockedorstalledin2025(TheCoolDown,April2026) due topermitting, power and local opposition issues, highlightingtheimportanceofdisciplinedunderwrit­ ing.Forprivatelenders,returnswillthereforedepend less on headline exposure to AI and more on struc­ turing discipline and the ability to assess digital and energyinfrastructure risks in an integratedway. Conclusion: dispersion, not distress Private debt is not entering a period of decline rather oneof adaptation.Higher interest rates, persistent in­ flation and geopolitical fragmentation are testing as­ sumptionsthatshapedtheassetclassduringitsrapid postcrisis expansion. These pressures are exposing weaknessesinleveragedandliquiditysensitivestrate­ gies,buttheyarealsoforcinganecessaryrecalibration of risk, structureandunderwritingdiscipline. The re­ cent strains observed in parts of the market (particu­ larlyinsemiliquidvehicles)reflectthegrowingpains of innovation rather than systemic fragility. The liq­ uidity episodes of late 2025 and early 2026 have pro­ vided a realworld stress test to the evergreen struc­ tures designed to broaden access to private credit. In response, the industry is refining redemption me­ chanics,improvingtransparencyandmovingtoward betteralignmentbetweenassetdurationandinvestor expectations.Thisprocess,whileuncomfortable,ulti­ mately strengthens confidence in the asset class. At the same time, private debt continues to play a critical role in financing the real economy. As banks remain constrained by capital and balancesheet re­ quirements, private credit is increasingly providing longtermfunding to infrastructure projects, energy transition assets, digital networks and growthori­ ented companies. In doing so, it supports invest­ ment, employment andproductivityat a timewhen public financing capacity is under pressure and structural capital expenditure needs are rising. Far from retreating, private debt is filling structural fi­ nancing gaps and enabling the delivery of econom­ ically and socially critical assets. This is also in line with the declared objectives of the Savings and Investment Union agenda by the Euro­ peanCommission,aimingtomobilizeprivateinvest­ mentsintoEUpublicpolicyalignedprioritiessuchas competitiveness, energy transitionanddigitalization. This role is further supportedby regulatorydevelop­ ments suchasAIFMDII,which formalizes loanorig­ inationbyalternativeinvestmentfundsandprovides greater legal clarity for private credit as a longterm roleinfinancingmarketsaswellasrequiringmorero­ bust risk management frameworks especially for semiliquid structures. Crucially,today’schallengesarehighlyuneven.Strate­ gies anchored in longdated, contractual cash flows (such as infrastructure, energy transition and digital assets) continue to demonstrate resilience, offering lower default rates and defensible recovery profiles. At the same time, secular capital expenditure inareas such as data centers andAI infrastructure is creating a durable pipeline of financing opportunities. How­ ever, the sector is increasingly facing constraints aroundpoweravailability,performancerequirements andcostinflation.Thesedynamicsarecontributingto greater selectivity and, in some cases, increased cau­ tion among lenders, reinforcing the importance of scale, counterparties, and contractual visibility, even where demand remains structurally strong. For managers and investors alike, the next phase of private debt will be shaped by selectivity: clarity on structure, precision in underwriting and alignment with longterm demand trends. In a more complex and fragmentedglobal environment, private credit is evolving rather than retreating and for those posi­ tioned on the right side of that evolution, the oppor­ tunity set remains substantial. Zeeshan AHMED, EY Luxembourg, Private Equity Partner, Infrastructure & Private Credit Lead Sophia RIAB, EY Luxembourg, Associate Private Equity & Private Credit Five forces reshaping Private Debt: rates, geopolitics, liquidity andAI By Bruno COLMANT, Member of the Royal Academy of Belgium T he historical transition from the Britishpound sterling to theU.S. dollar as theworld’s reference currency stands as one of the major turning points in 20thcen­ tury international economics. While the supremacy of the poundhad symbolized the peak of the BritishEmpire and the Industrial Revolution throughout the 19th century, the shift toward the dollar oc­ curred gradually between the twoworldwars andwas formally institu­ tionalized in 1944. Thiswas notmerely a monetary substitutionbut a profound geopolitical, economic, and energydriven upheaval whose effects are still felt today. By the endofWorldWar I (1914–1918), the structural weaknesses of theBritisheconomywere already evi­ dent. The conflict had drained a large portion of Britain’s gold reserves and foreign investments. The pound, which had been taken off the gold standard during thewar, struggled to regain stability. It was in this context that Winston Churchill, appointed Chancellor of the Exchequer in 1924, decided with lasting consequences. On April 28, 1925, in his first budget speech, he announced the return of the pound sterling to the gold standard at its prewar parity: 1 pound = $4.86, equivalent to 123.27 grains of fine gold. This parity, datingbacktoSirIsaacNewtonin1717,wassignifi­ cantlyovervaluedgivenpostwareconomicrealities. British prices remained high, exports lost competi­ tiveness, and imports becamemore expensive. JohnMaynardKeynes, inhis famous 1925pamphlet The Economic Consequences of Mr. Churchill, stronglywarned against themove. He predict­ ed deflation, rising unemployment, and unsustainable pressure on export indus­ tries, especially the coal industry. Events proved him right. Already weakened British industry slid into recession. Unemployment soared in mining and manufacturing regions. The crisis peaked in 1926with a nineday general strike, triggered by coal miners protesting wage cuts imposed to restore competi­ tiveness.Churchillhimselflateracknowledgedinhis writings that this monetary decision was one of the worst mistakes of his political career. With some ret­ icence, however, he did not rank it alongside the Gallipoli disaster of 1915. As First Lord of the Admiralty, Churchill had championed a poorly planned naval operation against the Ottoman Empire. The Gallipoli campaign, launched in April 1915, resulted in over 250,000Allied casualties and a humiliatingwithdrawalinJanuary1916,temporarily endingChurchill’s government tenure. Beyondthisspecificmonetaryerror,theshiftreflected adeepertransformationinglobalenergypower.Coal, the longtime king of the British economy since the Industrial Revolution, was gradually dethroned by oil.At the turn of the 20th century, the Royal Navy— under Churchill’s own impetus as First Lord of the Admiralty (1911–1915)—began converting its war­ ships fromcoal to fuel oil. This change, drivenby tac­ ticaladvantages(greaterspeed,range,andatsearefu­ eling), created a new dependency for Britain. The United States, with its vast fields in Pennsylvania, Texas, and California, dominated global oil produc­ tion. Companies such as StandardOil and its succes­ sors controlled extraction, refining, and maritime routes. World War I accelerated the change: Allied tanks, trucks, and aircraft ranonAmericanoil. If a currency is ultimately backed by a nation’s pro­ ductive and energy capacity—by the “available joules”—then thedollar’s supremacybecomes clear. The United States emerged from the Great War as theworld’s leadingcreditor, holdingamassive share of global gold reserves. By the 1920s, the dollar was alreadygainingground incentral bank reserves and international tradefinance. Recent studies showthat thedollarovertookthepoundastheprimaryreserve currency by the mid1920s, well before World War II. By 1929, outside the sterling area of the Commonwealth,thedollaralreadydominatedinter­ national public debt issuance. World War II (1939–1945) completed the transition. Britain, financially exhausted by the war effort, bor­ rowed heavily from the United States through the LendLeaseprogram.InJuly1944,theBrettonWoods Agreements, signed by 44 nations in New Hampshire, officially enshrined the dollar’s central role. The systemestablished fixed exchange rates for other currencies against the dollar, which itself remained convertible into gold at $35 per ounce for centralbanks.TheInternationalMonetaryFund(IMF) and theWorld Bankwere born from this conference. The dollar became the reference currency for world trade, reserves, and interventions. Yet this gold convertibility lasted only briefly. On August15,1971,PresidentRichardNixonunilaterally ended the dollar’s convertibility into gold—the famous“NixonShock.”Facinginflationarypressures, U.S.deficits,anddemandsforconversionfromFrance andothercountries,theUnitedStatesseveredthelast metalliclink.Againstexpectations,thedollarretained its de facto reserve status thanks to its liquidity, the depth ofAmerican financial markets, and the central position of the U.S. economy. The “petrodollar” sys­ tem further strengthened this dominance: starting in 1973–1974,agreementswithSaudiArabiaandOPEC tiedoil sales to theU.S. currency. This energybased reading helps illuminate conflicts inthe20thand21stcenturies.Beyondofficialrhetoric about democracy and freedom, American military interventions often reveal a more pragmatic logic: securing energy flows. World War II itself involved, amongotherthings,controlofoilintheCaucasusand theMiddleEast.After1945,theTrumanDoctrine,the KoreanWar, support for Israel, the Iraniancrises, and theGulfWars (1991 and2003) all fit partially into this pattern. Oil remains avector of power, and thedollar is itsmonetary counterpart. Thus, the shift fromBritish coal toAmerican oil was not simply a technological evolution. It representeda civilizational change: from a maritime empire built on coal and heavy industry to a continental super­ powermastering liquid energy, finance, and innova­ tion. The pound sterling, symbol of a vanished Victorian order, gradually yielded to the dollar, the reflection of a rising America. A century after Churchill’s fateful 1925 decision, this structural shift continues to shape international relations, monetary crises,andgeopoliticalbalances.Inanemergingmul­ tipolar worldwhere new currencies seek their place, thehistoryofthistransitionremindsusthatmonetary power is never eternal: it always reflects a nation’s productive energy and strategic vitality. Why did the pound sterling yield to the dollar a century ago?