Understanding Private Credit

Private Credit is a favored asset class among ultra high net
worth investors. Due to its much higher return and reduced risk
profile, we believe it should replace a large percentage of bond
allocations in investor portfolios. This episode covers a few of
the basics to set the foundation for later podcasts that will go
deeper into the weeds on Private Credit investing.


Private credit has existed since the early 2000s but is
relatively new to many investors. The concept involves making
large-scale loans to companies that can't obtain credit from
traditional banks. This need emerged post-financial crisis when
banks faced stricter regulations. Private credit offers benefits
like high monthly returns with lower risk compared to bonds or
stocks. The script explains vital terms such as capital
structure, preferred equity, mezzanine debt, senior secured debt,
call protection, and covenants, illustrating their roles in
making private credit a safer investment.


00:00 Introduction to Private Credit


00:18 The Rise of Private Credit Post-Financial Crisis


01:41 Understanding Capital Structure


03:24 Key Terms in Private Credit


06:01 Conclusion and Final Thoughts





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