Moondog
Term

Private credit

Also: private debt

Lending to companies outside the public bond markets.

Private credit provides loans directly to businesses, often at floating rates and on tailored terms. It can offer income and diversification, in exchange for illiquidity and careful credit work.

Private credit has grown quickly as banks retreated from lending, offering families income and floating rates. Its risks are less visible than in equities, defaults and weakening terms, and they tend to appear together in a downturn. The quality of the underwriting matters more than the headline yield.

Related terms

Strategic Asset Allocation The long-term target mix of asset classes a portfolio is built around. Stress Test Estimating how a portfolio would behave under adverse market scenarios. Suitability The regulatory duty to ensure advice fits the client's circumstances and objectives. Tactical asset allocation Short-term, deliberate tilts away from the strategic allocation to reflect a market view. Time horizon The length of time before invested capital is needed. Volatility How much returns vary around their average — a common measure of risk.

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