Invesco Private Credit

Private credit is an asset class generally 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 with unique circumstances requiring a private lender. We include senior secured loans within private credit because of our private-side orientation and consistent due diligence approach across private credit sectors. 

The three primary private credit segments are direct lending (inclusive of all performing corporate strategies), opportunistic (primarily backed by the cash flow of securities of non-corporate, non-correlated, or unique and esoteric assets), and distressed debt.

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

Public credit is debt issued or traded on the public markets. Private credit is privately originated or negotiated investments, comprised of potentially higher yielding, illiquid opportunities across a range of risk/return profiles. They aren’t traded on the public 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 because private credit securities generally are illiquid relative to publicly traded securities.