Overview of Investing in Private Corporate Debt

Abstract

Private debt is the second fastest growing alternative asset class behind private equity. Private debt refers to loans that are typically originated without the use of a bank or other financial intermediary. The private debt alternative asset class includes corporate debt, real estate debt, structured debt, and infrastructure debt. In this article, the author focuses on private corporate debt, the reasons for its rapid growth, the different credit strategies, the risks faced by investors in private debt programs, the estimated potential compensation for accepting those risks, and the challenges in managing a private debt program.