TCW’s Koch Sees Rising Defaults But No Bubble in Private Credit

TCW Group Inc. Chief Executive Officer Katie Koch said she expects higher defaults in the $1.7 trillion private credit market, but that she doesn’t see a bubble as investors are still willing to trade liquidity for yield.

“We know there’s going to be demand for private credit, because there’s demand for people to pick up some spread for sacrificing liquidity,” Koch said Tuesday at the Bloomberg Invest conference in New York.

Still, Koch expects defaults to rise in the next two years, primarily due to lax covenants and because people put capital structures in place ...