Private Credit
Private Equity glossary · Advanced LBO Modeling Mechanics & Deal Structuring
Definition
Loans to private-equity-backed or middle-market companies, typically not rated or syndicated.
Private Credit in plain English
Private credit is lending money directly to companies — usually medium-sized ones or businesses owned by private-equity firms — instead of buying their stock. Normally a big company borrows by issuing bonds that get a public credit grade and are sold to hundreds of investors; private credit skips all that, with one fund (or a few) quietly making the loan and holding it. It's like being the friend who personally lends someone $5,000 on agreed terms, rather than the money coming from a bank with a public rating. Lenders like it because these private, unrated loans tend to pay higher interest for taking on that extra effort and risk.
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