Animal Spirits Podcast Talk Your Book: How Private Credit Works
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Mar 17, 2025 
Phil Baur, SVP and Portfolio Specialist at Calamos Investments and former pro baseball player, dives into the intriguing world of private credit. He breaks down how it differs from high yield lending, and the advantages it offers during economic fluctuations. The conversation highlights emerging opportunities in commercial real estate and the importance of risk assessment for financial advisors. Baur also touches on the structural aspects of private credit funds, emphasizing modern underwriting and diversification strategies.
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Private Credit's Rise
- Private credit's popularity stems from its proven performance and increased accessibility through funds.
- The 2022 stock and bond correlation spike highlighted its diversification benefits.
Defensive Income
- Private credit offers an efficient way to generate income and play defense in a portfolio.
- It removes duration risk, focusing on pure credit risk for enhanced income generation.
High Yields Explained
- Private credit yields have historically been high, even with fees.
- Post-GFC regulations pushed banks out of lending to small/medium companies, creating an opening for private credit.