Understanding Private Credit

Private credit refers to privately originated and negotiated deals, extending beyond direct lending to include asset-based finance and investment grade (IG) opportunities. The market for private credit has been expanding, approaching $2 trillion in direct lending alone and over $5 trillion in asset-based finance. This growth is fueled by companies and sponsors increasingly working directly with private credit providers rather than relying on traditional banking channels. Despite the perception that private credit is a new phenomenon, it has evolved significantly since before the financial crisis, with established players like GE and CIT already in the space.