INVESTMENT OUTLOOK FOR 2023 - 28 - PRIVATE MARKETS KAREN AZOULAY Head of infrastructure debt Resilience in private markets - infrastructure debt Almost USD 10 trillion has now been invested in these markets, in what has become a global and ever more diverse asset class spanning corporate loans, real assets, structured finance and other instruments. In this article, we focus on infrastructure debt. Amid the search for yield and the need for portfolio quality, the private debt segment is becoming increasingly relevant. Having grown by 13-14% a year over the past decade, total private debt assets under management (AUM) now exceed well over USD 1 trillion. As an asset class, private debt has been resilient across economic cycles. As an example, it was the only private markets asset class to have increased fundraising every year since 2011, including during the pandemic. For investors willing to invest their money for longer periods, private debt can be a good portfolio diversifier, offering low volatility and a low correlation to listed markets. Other attractions include an appealing relative value, inflation-linked cash flows and an illiquidity premium over listed assets. Floating rate instruments are part of the segment. They can be more attractive than vanilla bonds as their coupon is linked to a base rate, allowing it to increase amid rising market interest rates.