What is defined as non-traditional lending strategies and investment in credit products outside of traditional banks?

Private credit is characterized as non-traditional lending strategies that provide financing to borrowers without going through traditional banking institutions. This includes a variety of investment strategies in credit products, such as direct lending, mezzanine financing, and distressed debt, which are typically managed by private investment firms, private equity firms, or hedge funds.

The primary feature of private credit is its focus on illiquid investments that are often tailored to the specific needs of the borrower and negotiated outside public markets. This allows for greater flexibility in terms of structuring the financing, which can be beneficial for both borrowers seeking capital and investors looking for unique opportunities.

In contrast to public credit which involves bonds and other securities issued in public markets that are heavily regulated, or alternative credit which may overlap but can also refer to diverse non-bank funding sources, private credit specifically emphasizes the direct lending relationship between private lenders and borrowers.