Private Debt
Private debt includes all forms of debt securities that are not traded on public markets. First and foremost, institutional investors such as funds and insurance companies are the main financiers of private debt - but usually not banks. In the area of direct lending, which includes crowdlending at Crowd4Cash, private debt is also financed by private individuals. Unlike listed corporate bonds, private debt is generally more difficult to trade. Due to a premium for this lower liquidity, higher yields can usually be achieved in the private debt sector.
Private debt experienced a rapid upswing after the financial crisis of 2008, as traditional banks increasingly withdrew from the credit financing business. At the same time, private investors sought comparatively safe investment opportunities that continued to offer attractive returns even in a low interest rate environment. For an in-depth analysis on private debt and why this asset class is still not expected to slow down, see our blog on private equity, private debt and direct lending.
