Private credit after the rate cycle

Higher rates made private credit look simple: floating coupons, borrower need, allocator demand. As the rate path becomes less one-directional, the simple version of the story expires.

What remains is credit analysis. Structure, covenants, collateral and the borrower’s ability to refinance in a less generous market will separate durable books from those assembled for origination volume.

We treat private credit as a way to be paid for underwriting specific risks — not as a substitute for equity with a nicer Sharpe ratio in a backtest. Documentation quality is part of the return.

For investors, the question after the rate cycle is not whether private credit ‘still works’. It is which lenders still underwrite, and which merely originate.

This article is for general information only and does not constitute investment advice or an offer to invest.