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Private Credit

Introduction to Private Credit

A plain-English introduction to private credit: what it is, why it grew after 2008, who borrows, lends and invests, how a private loan is priced and protected, and how lenders lose money.
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Level
Beginner
Lessons
14 lessons
Length
3.9 hours
Modules
4 modules

Module 1 · What private credit is

50 min

  1. 1.1

    1.1 Defining private credit Free preview

    What private credit is: loans from non-bank lenders that are privately negotiated and usually held to maturity, and how they differ from public debt.

    15 min
  2. 1.2

    1.2 How the market grew

    Why private credit grew after 2008: banks stepped back from middle-market lending under new rules, and investors went looking for yield.

    15 min
  3. 1.3

    1.3 Private credit vs. public markets

    How private credit compares with bank loans, broadly syndicated loans and high-yield bonds on execution, pricing, liquidity and disclosure.

    20 min

Module 2 · Who's involved

45 min

  1. 2.1

    2.1 Borrowers

    Who borrows from private lenders, from sponsor-backed and family-owned middle-market companies to larger firms, and why they choose private credit.

    15 min
  2. 2.2

    2.2 Lenders

    The main private lenders: direct lending funds, business development companies (BDCs), insurers, and partnerships between banks and private credit managers.

    15 min
  3. 2.3

    2.3 Investors

    Who supplies the money behind private credit, from pensions and insurers to endowments, sovereign wealth funds and private wealth, and why each invests.

    15 min

Module 3 · How a private loan works

75 min

  1. 3.1

    3.1 The capital structure

    How first lien, unitranche, second lien, mezzanine and equity stack up, who gets paid first in a default, and what "secured" really means.

    20 min
  2. 3.2

    3.2 Loan economics

    The pieces of a private loan's price: SOFR plus a spread, rate floors, OID and fees, call protection, PIK interest and unused fees.

    20 min
  3. 3.3

    3.3 Worked example: all-in yield

    Step by step, turn a unitranche loan's SOFR, spread and OID into one all-in yield, then see how rate floors and early repayment change it.

    20 min
  4. 3.4

    3.4 Covenants and security in plain English

    The promises lenders ask borrowers to make, the collateral that protects them, and what really happens when a borrower breaks a covenant.

    15 min

Module 4 · Risk, return and the deal lifecycle

65 min

  1. 4.1

    4.1 Credit risk

    How lenders lose money: default rates, recovery rates and expected loss, and why a loan's spread has to cover them.

    20 min
  2. 4.2

    4.2 Other risks

    Beyond defaults: liquidity, interest-rate, concentration and valuation risk in loans that rarely trade.

    15 min
  3. 4.3

    4.3 The deal lifecycle

    Follow a private loan from first contact to final repayment, and see who does what at each stage.

    15 min
  4. 4.4

    4.4 Current debates

    Four debates to watch: competition with syndicated loans, rising PIK, individual investors, and regulators' focus on valuation and leverage.

    15 min

Final assessment