Money For the Rest of Us How to Invest in Private Credit / Direct Lending
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Jan 29, 2025 Discover the intriguing world of private credit and direct lending, where companies are opting to stay private. Learn how this investment avenue contrasts with traditional leverage loans, and why it's on the rise. The discussion highlights the flexibility and direct connections to borrowers that private credit offers. Explore various investment opportunities, from business development companies to closed-end funds, as well as the risks tied to shifting interest rates. This is an insightful dive into a growing financial niche!
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Private Company Growth
- Publicly traded companies are declining, while private companies are rising.
- This shift is partly due to a service-based economy and companies staying private longer.
Leveraged Loan Market Evolution
- Traditional bank loans have shifted towards a syndicated loan market (leveraged loans) over the past few decades.
- These loans are packaged into CLOs, often used for larger companies and LBOs.
Private Credit Characteristics
- Private credit involves a single lender providing loans to private companies, unlike syndicated loans.
- These loans are typically unrated, unregulated, and held on the lender's books for 3-6 years.