Research

Private Credit: Characteristics and Risks

Fang Cai and Sharjil Haque, Board of Governors of the Federal Reserve System (FEDS Notes) · 2024

Private credit is now a standard topic in private equity, leveraged finance and credit fund interviews. This note gives the loan-level facts: size, spreads, coverage, recoveries and where the risks sit.

• Credit
• Deals and M&A

1 idea from this research

• ObservationCredit

  Private credit lends larger, with thinner coverage and lower recoveries

  Private credit's borrowers are more levered and its recoveries lower than the syndicated market's, and the capital waiting to be deployed is what pressures underwriting.

  Credit fund, leveraged finance and private equity interviews, and any discussion of where the risks in private credit sit.