Invesco Private Credit

Private credit is an asset class that can generally be defined as non-bank lending — privately negotiated loans and debt financing from non-bank lenders. The private credit market typically serves borrowers too small to access public debt markets or have unique circumstances requiring a private lender. Invesco includes broadly syndicated loans within private credit because of the firm’s private-side orientation and consistent due diligence approach across private credit sectors.

In general, private credit and private debt are terms that are used interchangeably to refer to private lending — loans that are provided to companies by private investors and private markets rather than by banks or public debt markets.

Default risk is the leading risk of private credit and emphasizes the need for in-depth, thorough due diligence and credit expertise. The risk that a borrower will be unable to pay back a loan (i.e., default) may be elevated because private credit typically involves non-investment-grade borrowers. Liquidity risk is another key risk of private credit because private credit securities generally are illiquid relative to publicly traded securities. 

Global private credit assets total over $1 trillion* as of Dec. 31, 2021,  according to various estimates. Private credit assets have been growing rapidly alongside the steady growth of the private equity industry and as investors seek diversified sources of yield and income.

*Source: Preqin database, as of Dec. 31, 2021 (most recent data available).