Sub-Markets

📊 Private Credit Market Overview Private credit is a broad asset class that covers lending outside of traditional banks and public bond markets. It spans everything from consumer finance to institutional-grade securitizations. Below is a breakdown of the primary sub-markets and how each operates.

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🧾 Consumer Lending Market

The consumer lending segment involves individuals borrowing from banks and non-bank lenders. These loans typically fund personal expenses and are underwritten based on credit scores and income data.

Key structures:

• Unsecured Consumer Credit Credit cards, personal loans, and buy-now-pay-later (BNPL) products. These are not backed by collateral and rely entirely on the borrower’s credit profile.

• Secured Consumer Credit Mortgages, auto loans, and other forms of personal credit backed by specific assets. Lenders underwrite both the borrower's profile and the asset value.

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🏢 Corporate Lending Market

This segment involves companies raising debt capital from non-bank lenders and private investors. These are generally bespoke, higher-yielding credit agreements for growing or underbanked firms.

Key structures:

• Venture Debt Loans extended to VC-backed startups, often with equity kickers or warrants. These are typically offered by venture debt funds.

• Middle Market Loans Target companies with $10–75 million in EBITDA. These loans may be secured or unsecured and are often held by private credit funds with flexible terms.

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🏦 Commercial Loan Market

Commercial loans are usually originated by banks and extended to companies with operating history and existing cash flow. These loans are more standardized but vary in collateralization.

Key structures:

• Unsecured Loans Backed by cash flow and corporate guarantees, but no specific collateral.

• Asset-Based Loans (ABLs) Secured by tangible or financial assets such as inventory, receivables, or equipment. These loans often come with borrowing base formulas.

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🇺🇸 U.S. Private Placement Market

The U.S. Private Placement (USPP) market involves investment-grade companies raising long-term debt from insurance companies and other large institutions. These deals are typically less liquid but highly structured.

Key structures:

• Unsecured Private Placements Long-term notes issued without collateral, supported by strong financials and credit ratings.

• Secured Private Placements Asset-backed private notes structured for risk-averse institutional buyers.

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🔧 Structured Credit Market

Structured credit involves bundling income-generating assets (like loans or leases) into a vehicle that issues debt backed by the cash flows of those assets.

Key structures:

• Credit Facilities Debt extended by a single bank or fund to a special purpose vehicle (SPV), secured by the pool of contributed assets.

• Private Securitizations Asset-backed debt issued to a group of private investors. These are often tranched and involve credit enhancements or external servicing.