Perspectives · Private credit · 2026

Private credit: what can go wrong

Private credit means lending directly to companies, outside the public bond markets. Investors are paid for lending against assets or cash flows that are not traded on an exchange, and often for accepting that they cannot sell quickly.

The risks fall into three groups. The first is credit risk: a borrower can fail to pay. The second is structure: who has a claim on which assets, whether collateral has been pledged more than once, and how the loan is documented. The third is liquidity: funds usually allow withdrawals only at set intervals, often with a cap, as the 2026 redemption limits at large managers showed.

Reading a private credit offering means reading all three: the quality of the borrowers, the legal protections, and the terms on which you can leave.

General information only; not investment advice. Read the risk warning.