Market
Memos from Howard Marks: More on Repealing the Laws of EconomicsDespite its growing prominence in investing conversations, private credit is often misunderstood. Simply put, private credit refers to loans made directly to a borrower from a non-bank lender. It’s essentially a way to provide debt financing to borrowers who are unable to access traditional bank loans or public markets, typically due to the nature or size of their businesses.
For illustrative purposes only.
Private credit offers significant potential benefits for investors. These include:
minimizing interest rate risk
attractive yields and long-term returns
lower volatility than liquid debt instruments, downside risk mitigation
enhanced diversification
In Private Credit Demystified, published by the Alts Institute, we explore private credit characteristics and the various private market strategies. We’ll also discuss the reasons behind private credit growth, why it’s expected to continue on its growth trajectory, and the ways an allocation to private credit can potentially benefit a portfolio.
Private credit strategies were once only available to the largest institutional investors. But increasing investor demand has spurred the development of new vehicles and solutions such that private credit – and its potential benefits - is now more accessible to a broader range of investors.
1Source: Preqin: Future of Alternatives 2029 (published September 2024); Preqin Global Report, Private Debt 2025 (published December 2024). There is no assurance that such events or projections will occur, and actual outcomes may be significantly different than those shown.
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