Private Credit Wants Everyone’s Money

Maybe the hottest topic in finance in the last few years has been private credit, and we’ve talked about it a lot around here. I often think of private credit as fundamentally a story about matching assets and liabilities. The story is something like:

That’s the idea, but now we talk a lot about the exceptions. One important exception is that a lot of private credit firms get leverage from banks — instead of just using their long-term investors’ locked-up money to make loans, they also borrow some money from banks to fund those loans — and thus the run risk of banking sneaks back into private credit.