Stéphane Blanchoz, CIO for Alternative Debt Management at BNP Paribas Investment Partners, explores why allocations to alternative debt and other direct lending strategies could be attractive for investors in 2017 as the segment grows.

Investors should see an increasing opportunity in SME private credit in 2017, according to Stéphane Blanchoz, chief investment officer for alternative debt management at BNP Paribas Investment Partners.

A confluence of factors has prompted rapid growth in non-bank lending as an investable asset class with a swelling universe of funds offering exposure to Alternative credit in recent years.

The drivers of the growth in this market segment are bank disintermediation and regulatory support from policymakers in combination with an ever-intensifying search for yield from investors. In addition, investors are having to adapt to an increasingly volatile outlook for vanilla fixed income as well as a low interest-rate environment and mature bull-runs in equity markets.