Private lending remains stable despite macroeconomic risks – this is the central message from Jim Zelter, Co-President of Apollo Global Management, at the HSBC Investors Conference in Hong Kong. The market is "not in a bubble," emphasized the manager, citing structural differences from previous financial excesses.

Zelter contradicted fears that the rapid increase in private lending could lead to systemic disruptions. Although the industry is "late in the cycle," he said: "Bubble means irrational behavior. And we don't see that in the broader market." While there are investors with aggressive portfolio structures, massive losses like those from past burst bubbles are not expected.

Apollo is one of the dominant players in the private credit market—loans granted directly by investment firms to companies rather than through banks. The sector has expanded particularly due to the rising interest rate environment, which has pushed investors towards credit-like investments with fixed returns. Apollo itself manages credit volumes of around 600 billion US dollars in this segment—six times more than in the company's traditional private equity business.

Zelter emphasized that the vast majority of private loans were investment-worthy. In his definition, the sector encompassed "everything that is on bank balance sheets today" - thus extending far beyond traditional SME financing. He quantified the global volume as "an ocean of 40 trillion dollars.

Zelter's statements are in stark contrast to the International Monetary Fund's assessment. Last year, the IMF warned that the sector could suffer significant losses in the event of a severe economic downturn, as no comparable phase of stress has yet been experienced. The lack of regulatory monitoring could potentially pose systemic risks, according to the IMF in its "Global Financial Stability Report.

Even macroeconomically, Zelter sees opposing forces at work.