From View From The Top, 1 April 2026
THE TURNING MARKET
Where Disciplined Capital Goes When the Cycle Shifts
Last week I wrote about the risk hiding in private credit. Valuations marked above reality. Leverage amplifying mispricing. Loss rates that look stable — until they don’t.
This week I want to look at the other side of that story. Because when a cycle turns, it doesn’t just create risk.
It creates opportunity. And the signal that something is turning isn’t always where you expect to find it.
THE TALENT SIGNAL
This week I’ve been meeting candidates as we build out the Hilltop platform. People who, two years ago, would have been very difficult to access. Experienced operators. Commercial minds. People who’ve run real assets through real cycles.
Available. Labour markets don’t lie.
When experienced people surface, something underneath has shifted. Credit origination is slowing. Transactions are thinning. Development pipelines are stalling.
The surface narrative still says the market is resilient.
But the talent market is telling a different story.
TWO MARKETS. ONE SIGNAL.
Labour markets and capital markets adjust the same way. They lag. They smooth. They hold the old narrative longer than the data supports. And then they move — quickly, and together.
Private credit is showing the same pattern.
Valuations holding steady while public markets reprice. Loss rates low while duration extends. Structures built for a different rate environment being quietly tested.
These aren’t independent signals. They’re the same signal — read across different markets.
A cycle is turning.
HOW THE GAP ACTUALLY WORKS
I think it’s worth understanding the mechanics. Because this isn’t abstract theory.
Private credit portfolios are valued by the managers who run them. They are marked internally.
They are not by the market. Not by independent third parties pricing against comparable transactions. By the managers themselves, using internal models built on assumptions about recovery rates, timelines, and collateral values. Until they are sold or a refinancing needs to takes place; then they are market to the reality of the market and right now that’s grim.
Of course in a rising market, this works. Asset values support the model. Refinancing is available. That’s what most managers today have seen. Only a fraction have been through multiple cycles with real re-sets.
But when markets shift; rates rise, asset values soften, and refinancing becomes uncertain — the model doesn’t automatically adjust. It adjusts slowly, incrementally, through quarterly reviews that smooth rather than correct and the sharply with every transaction that trades at a significant discount.
What I’m saying here is that the reported valuations lag the real world.
And here’s the real kicker-
When junior debt is marked higher than comparable senior debt — which we’re seeing in some portfolios right now — it tells you the model has lost contact with restructuring reality. In any workout, junior sits behind senior. Junior takes the first loss. Junior recovers last, or not at all.i f your model says otherwise, you’re not measuring risk.
You’re deferring it.
Add leverage to deferred risk, and the dynamic shifts entirely. Leverage was designed for stable environments. When values soften and timelines extend, leverage doesn’t just reduce returns — it accelerates loss recognition when the adjustment finally comes.
The question isn’t whether the adjustment comes.
It’s when. And how fast.
THE SIGNAL FROM PUBLIC MARKETS
Public vehicles are already showing the answer.
BDCs — Business Development Companies, the publicly traded equivalents of private credit funds — are trading at meaningful discounts to their stated NAV. Look at the house builder’s stocks. Some have been hit hard; down by 60+ percent this year.
That discount is the market’s verdict on model valuations.
By all accounts, I’d say the market is saying: “we don’t believe the book.”
Share prices falling. Redemption pressure building. Investors rotating out of vehicles where they can’t see through the model to the underlying reality. In my experience public markets don’t wait for quarterly reviews. People know well in advance to what is happening. They price continuously, incorporating every data point — rate moves, refinancing conditions, comparable transactions, management credibility. But when public and private valuations diverge significantly, history is consistent about what happens next. Private valuations move toward public reality; in other words, people take their losses and move on.
THE NEW WAVE OF CAPITAL
But wait, in this slow turmoil here’s what isn’t being talked about enough. A different class of capital has been watching all of this and sees the opportunity.
Not the leverage-heavy vehicles built on assumptions that no longer hold. Not the funds that deployed aggressively when spreads were thin and structures were loose. This is different capital looking to fill the structural gaps.
It has been through cycles before. It knows what dislocation looks like in its early stages — when the surface is still calm but the underlying data is shifting. And it knows that the best entry points don’t come with headlines.
They come quietly. In the gap between the narrative and the reality. Not the Key-Stone Cop where the whistle blows and everyone runs to the next trend, until the whistle blows and they run to the other.
This capital is characterised by a few things: low leverage or none, lower cost, genuine operational capability, full value chain services, long time horizons, and — critically — the ability to move quickly when structure matters more than momentum.
It isn’t distressed-chasing. It isn’t opportunistic in the short-term sense. It’s positioning. For the next three to five years. Ahead of the broader market recognition that a rotation has begun. And it’s starting to look seriously at UK residential credit.
Because UK residential credit has something that most of the private credit market doesn’t right now.
Real assets. Real collateral. Real demand.
WHY UK HOUSING NOW
The structural case for UK residential has not changed. If anything, it has strengthened in the last 6 years — precisely because the macro environment has made it harder to build.
The numbers are stark. England needs approximately 300,000 new homes per year to keep pace with demand. Actual delivery has consistently fallen short — running at roughly half that in recent years, with London particularly acute. This isn’t a cyclical shortfall. It’s structural.
The planning system is the primary constraint. Reforms have been promised across multiple governments and delivered only partially. The result is a market where land values remain elevated, build costs have risen sharply with inflation, and viability — the gap between what can be built and what the numbers support — is genuinely difficult – and where capital is become extremely cautious after nearly a decade of spreadsheet based underwriting that became increasingly marginalised by the drive for origination. The landscape of alternative lenders is changing in real time.
Development pipelines are stalling not because demand has weakened but because the economics of delivery are broken at the margin.
And yet the underlying need doesn’t go away.
The squeezed middle sits at the heart of this.
We’ve talked a lot about this market segment these past two years. These are households earning between roughly £35,000 and £80,000 — too much to qualify for social or affordable housing, too little to access open market ownership in any major UK city. In London, the mismatch is severe. In regional cities, it’s growing. The negative rental stigma is slowly evaporating and former buyers are turning into renters.
This cohort is large, financially stable, and chronically underserved.
They are the demand base for a segment that institutional capital has historically avoided — not because the fundamentals are weak, but because the delivery model was complex. Fragmented land. Small and mid-size developers. Schemes that require operational involvement rather than passive exposure.
But that complexity is exactly why the opportunity exists.
The capital that can operate in it — all of it – that understands local markets, the full risk at each level of the capital stack, the local developers, local planning — can access yield and structure that the vanilla institutional market cannot reach.
And in a world where private credit is quietly repricing, where BDCs are trading at discounts, where duration is extending across leveraged portfolios — the case for real assets, real collateral, and real demand has never been clearer for capital platforms to appear.
WHAT THE ROTATION LOOKS LIKE
Rotations rarely announce themselves. They show up first in the data that most people aren’t watching. They show up in threads on LinkedIn and brave newsletters, salent availability. Then in public market pricing — discounts that the private market initially dismisses as sentiment, until they can’t.
Then in capital flows. New vehicles forming. Mandates shifting. Allocators asking different questions than they were asking twelve months ago.
I feel we are somewhere between the first and second stage of that sequence right now.
The managers who move in this window — who are already positioned with the right assets, the right structures, and the right operational capability — will look very different from those who wait for the consensus to confirm the rotation. Because by the time the consensus confirms it, the entry point is gone.
HARD LANDING?
TProbably not. The most important shifts don’t announce themselves.
A very interesting way to look at this from another perspective and stat; they show up in the talent available. In the deals that don’t close. In the shops that aren’t originating. In the extension of timelines that nobody wants to talk about.
And then — for those who were paying attention — in the opportunities that open on the other side.
Every cycle has a hard landing for those who were positioned wrong. And a very different outcome for those who weren’t.
The cycle is turning. The question isn’t whether to move.
It’s whether you’re already in the right place when it does.
