How does private credit work?

Question

It’s all in the subject line. What is it? How does it work? And what’s the appeal for asset managers? (how do they make money on it)

In: Economics

Answer 1

Sure, imagine private credit as a special club where you lend money to businesses instead of banks. These businesses might be too small or too unique for regular banks. Asset managers like it because they make money from interest when these companies pay back with a little extra for the favor of borrowing that money. It’s like being paid back your buddy’s ice cream money with interest!