Journal of
Corporate
Renewal
June
2016
continued on page 6
The old adage claiming that it used to
be harder than it is now is applicable
in a host of situations. However, it's
nearly never true on more than the
most superficial of levels. Such is the
reality for middle market borrowers
today. In many ways, things have never
been easier. The proliferation of private
credit funds has markedly improved
access to a wider array of capital in the
middle market (Figure 1, page 6). On
the other hand, navigating this new
landscape is more complex, and the
workout process for a credit held by a
private credit fund is often less defined.
Private credit exists in many forms,
and the most straightforward definition
is found in the enumeration of what
is not considered part of the private
credit universe. Private credit is debt
capital that is not otherwise classified
as (i) private/public equity, (ii) a
publicly traded bond, or (iii) a quasi-
publicly traded institutional syndicated
leveraged loan. Private credit in the most
simplified of terms consists of a loan
made from lender to borrower. Loans
made in this space may be transferred
but are rarely traded and are relatively
illiquid. A loan from Bank A to Company
B is one example of private credit. A
loan from Bank C and Mezzanine Fund
D to Borrower E is another example.
Private credit is not novel, but the
sector has experienced the recent,
rapid emergence and growth of
non-bank private credit, especially
in direct lending. At work are two
forces, specifically the fact that (i)
investors in the leveraged loan and
private equity markets have moved
down in both the size spectrum and
I used to walk to school. In the snow. Uphill. Both ways.
Journal of
Corporate
