Introduction to Investment Grade Private Credit

Executive Summary

Large institutional investors allocate a significant amount of their total assets to fixed income, which is intended to provide consistent income and lower volatility than equity. Insurance companies, pension funds and certain other long-term investors seek assets that provide both long duration and potentially lower losses than other investment choices. Many of these investors now realize that the fixed income asset class which can provide the duration they need along with potentially higher returns and lower losses is “private credit,” also known as “private placements” (in this paper we use both terms interchangeably).

The purpose of this paper is to introduce the asset class and explain its nature, characteristics and distinctions and explore some of the advantages and risks of investing in private credit.