Morgan Stanley (MS) CEO Ted Pick says that the troubled $1.8 trillion private credit market is undergoing an “adolescent moment.”
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Speaking to analysts and media after the company’s latest financial results, Pick said, “While it’s still a growing class, it’s having a learning moment… We’ll call it an adolescent moment, where both the lenders and the borrowers are being looked at carefully.”
Private credit has emerged as a growing threat to financial markets as concerns rise about its exposure to software companies that are now under threat from artificial intelligence (AI). A growing number of private credit funds have reported outsized redemption requests in recent months.
The Outlook for Private Credit
Despite the current issues, Pick said that he believes the private credit market still has “extraordinary growth potential” and that credit will perform well when the economy is in good shape. The current scrutiny is positive as it has provided new insights into the asset class, added the CEO.
Pick noted that Morgan Stanley’s exposures to private credit is “modest” and less than 1% of its assets under management (AUM). Morgan Stanley has said that the vast majority of its lending to business-credit intermediaries is through direct-lender financing.
Is MS Stock a Buy?
Morgan Stanley’s stock has a consensus Moderate Buy rating among 12 Wall Street analysts. That rating is based on five Buy and seven Hold recommendations issued in the last three months. The average MS price target of $194.90 implies 1% upside from current levels.
