Matt Levine’s Money Stuff: Private Credit Has Some Debt

BDC leverage

The simple story of private credit is that private credit funds raise money from investors and use the money to make loans. The investors’ money is locked up for a long time, so there is no maturity mismatch: Unlike, say, a bank, a private credit fund can hold its loans to maturity and will never have to give investors their money back early; there can never be a “run” on private credit funds. Sure, certain retail private credit funds — non-traded business development companies — promise to give investors up to 5% of their money back each quarter, but ...