Efficient deployment of capital is critical to delivering strong returns. Managers need to strike the right balance between raising capital and putting those assets to work. Raising too much capital too quickly can lead to “cash drag,” where excess capital sits in low-yielding instruments, or worse, forces managers to compromise on deal quality to stay […]
Capital costs are a major driver of returns in private credit. They reflect what a manager pays to finance the loans in the portfolio. Managers with access to lower-cost, stable financing can offer more competitive terms to borrowers and support stronger returns for investors. The structure of that financing matters too. Diverse sources, such as […]
Who a private credit manager lends to is one of the biggest drivers of risk and return in private credit. Borrower size, ownership, and industry all matter. Smaller companies with less than ten million dollars of EBITDA may offer higher yields and lender-friendly terms, but they can be more vulnerable to economic shocks. Larger companies […]