Private Credit

Public bond markets and private credit represent distinct lending ecosystems defined by liquidity, control, and interest rate structures. While public bonds typically feature fixed coupons and minimal covenant protections, private credit utilizes floating rates—often pegged to SOFR—and stricter security measures like 40% to 70% loan-to-value ratios. Investors access these private markets through drawdown or evergreen interval funds, which offer varying liquidity profiles and strategies ranging from direct lending to mezzanine financing. Mezzanine debt often functions as a hybrid tool for leveraged buyouts, sometimes incorporating "payment-in-kind" toggles or equity warrants. In more aggressive strategies, distressed debt investors target non-performing loans at a discount, aiming for capital appreciation through bankruptcy reorganizations. These specialists often seek the "fulcrum security" to convert debt into equity, effectively deleveraging viable companies burdened by unsustainable capital structures to capture long-term value.