Odd Lots This Is the Impact of Billions Flowing Into Private Credit
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Jan 8, 2024 
Ben Emons, a senior portfolio manager at Newedge Wealth, dives into the booming world of private credit, discussing its rapid growth and competition with traditional lending. He reveals how private credit can offer unique advantages to investors, particularly in a rising rate environment. Emons also highlights the implications of recent regulations that have pushed companies towards private financing, and warns of potential risks to the economy as this asset class expands. With banks now getting involved, the landscape is shifting dramatically.
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Private Credit's Portfolio Role
- Private credit offers portfolio diversification and has been largely uncorrelated with traditional asset classes.
- It attracts investors with historically low default rates and customized loan covenants.
Why Companies Choose Private Credit
- Companies choose private credit when they are non-listed and prefer to avoid public markets.
- Private lenders often have established relationships with these companies, providing customized financing solutions.
Private Credit Fills a Void
- The rise of private credit is partly due to banks' reduced lending capacity, especially for smaller, lesser-known companies.
- This has created a void that private lenders have filled, offering specialized due diligence and bespoke loan terms.