What is private credit?
Private credit involves non-bank institutions—like asset managers, funds, or insurance companies—providing loans directly to businesses. These loans are negotiated privately rather than traded on public debt markets, which is why they’re considered an alternative investment.
Borrowers often turn to private credit when traditional financing isn’t a fit, whether due to speed, structure, or size of the deal. This includes situations like funding a business expansion, refinancing debt, or supporting a merger or acquisition.
For investors, adding a private credit allocation to their portfolios can offer the potential for higher yields than traditional fixed-income assets, albeit with higher risk and reduced liquidity. Please note that while loans may be secured by collateral and offer contractual protections, they can still carry credit and default risk.
Private credit continues to gain traction as institutional and high-net-worth investors seek income-generating opportunities beyond traditional bonds.
