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Jul 2024
6m 32s

Understanding Private Credit

BRAD JOHNSON
About this episode

Private Credit is a favored asset class among ultra high net worth investors. Due to its much higher return and reduced risk profile, we believe it should replace a large percentage of bond allocations in investor portfolios. This episode covers a few of the basics to set the foundation for later podcasts that will go deeper into the weeds on Private Credit investing.


Private credit has existed since the early 2000s but is relatively new to many investors. The concept involves making large-scale loans to companies that can't obtain credit from traditional banks. This need emerged post-financial crisis when banks faced stricter regulations. Private credit offers benefits like high monthly returns with lower risk compared to bonds or stocks. The script explains vital terms such as capital structure, preferred equity, mezzanine debt, senior secured debt, call protection, and covenants, illustrating their roles in making private credit a safer investment.


00:00 Introduction to Private Credit

00:18 The Rise of Private Credit Post-Financial Crisis

01:41 Understanding Capital Structure

03:24 Key Terms in Private Credit

06:01 Conclusion and Final Thoughts



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