Spotlight on Kevin Marchetti, Chief Investment Officer & Head of US Direct Lending, Man Group
Global Thought Leader Spotlight
Kevin Marchetti, Chief Investment Officer & Head of US Direct Lending, Man Group
In my role as the Head of Direct Lending and Chief Investment Officer at Man US Direct Lending, I am responsible for leading the Underwriting and Portfolio Management teams, leveraging my extensive experience in risk management and middle market lending.
I also serve on the Investment Committee, responsible for final approval of new and additional investments in the portfolio.
Macro uncertainty is stress-testing credit portfolios
For years before COVID, we were living in an incredibly forgiving environment, rates near zero, defaults near zero.
After a prolonged benign environment, the compounding effects of persistent inflation, tariffs, shifting government policy, and a higher-for-longer rate environment are placing real pressure on US corporate borrowers through elevated wages, interest burdens, and general uncertainty.
We are not calling it a crisis, but it is a meaningful regime change that deserves serious attention.
The core middle market offers a structural edge that the mega-fund space does not
As more capital floods into the upper middle market, we are seeing exactly what you would expect, covenant-lite loans, looser documentation, susceptibility to liability management exercises.
In contrast, the core middle market (EBITDA of US$10–75MM) retains meaningful lender protections, tighter leverage, and financial maintenance covenants on virtually every deal.
Importantly, covenanted loans have historically delivered recovery rates 9-11% higher than their covenant-lite counterparts.¹
Deal activity compression creating a bifurcated market
Higher volatility is sidelining M&A activity, compressing spreads, particularly for mega funds under deployment pressure.
For disciplined, selective lenders in the core middle market however, this environment actually preserves attractive spread-per-turn-of-leverage premiums.
Technology sector crowding warrants caution
Software-driven issuance has surged to nearly US$30 billion, bringing with it aggressive structures and compressed economics.
In this corner of the market, selectivity and sector discipline are critical and essential differentiators in this environment.
Implications for sophisticated investors
We believe the convergence of these themes carries clear implications for how sophisticated investors should think about their private credit allocation:
Elevating private credit from satellite to core: Institutional adoption signals an enduring commitment to the asset class, and rightly so, private credit can offer diversification, risk-adjusted income, and low correlation with public market volatility. But the current environment suggests that the asset class can be treated as a strategic treat this as a strategic, core allocation with an emphasis on quality and resilience.
Prioritising credit selection over deployment volume: “Easy money” is behind us and has furthermore created what we call a "credit picker's market”. As performance bifurcates across managers, we believe that the advantage will accrue to experienced teams with rigorous bottom-up underwriting, daily portfolio monitoring, and a demonstrated ability to deliver low defaults and low losses across cycles. Investors should interrogate a manager's credit process, not just their return profile.
Favouring managers with institutional scale — but fund-size discipline: GPs need to be large enough to bring institutional-quality resources to bear yet disciplined enough to match fund size to the opportunity set. Oversized funds chasing a shrinking deal pipeline inevitably leads to compromised structures and compressed returns.
Demanding transparency and focus on capital preservation: In a market where leading indicators such as revenue growth, EBITDA growth and interest coverage ratios matter more than ever, investors should seek managers who provide genuine visibility into portfolio health and who treat risk management and income generation as the primary objectives, not afterthoughts.
Kevin will be presenting at Global Investment Institute’s upcoming Private Credit Investment Forum, taking place on Thursday, 14 May 2026 in Melbourne CBD, Victoria. To register your interest in attending, click here or for more information email zlatan@globalii.com.au.
¹ Source: Moody’s Ratings.
² Source: KBRA DLD Research Insights & Outlook Private U.S. Sponsored Deals Analysis, December 2025.
Kevin Marchetti, Chief Investment Officer & Head of US Direct Lending, Man Group
Kevin is Chief Investment Officer and Head of US Direct Lending at Man Group.
Kevin has extensive experience in risk management and middle market leveraged finance across a range of industries and strategies. Prior to joining Varagon Capital Partners (now Man Group) in 2014, he was a Senior Vice President at GE Antares Capital. He has also held senior risk positions at CIT Group and TD Bank.
Kevin holds a BA from Springfield College and an MBA from the University of North Carolina at Charlotte.
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