Private debt has become a rapidly growing segment in the investment landscape, valued at $1.5 trillion in 2024 and projected to reach $2.6 trillion by 2029. Unlike public bonds, private debt involves direct lending to companies or projects, often through loans not traded on public markets.
Private debt often attracts investors due to its potential for higher yields, income stability, and portfolio diversification, particularly in low-interest-rate environments. However, private debt carries unique risks, including less regulatory transparency compared to publicly traded securities.
Effective private debt investing requires careful due diligence, including evaluating borrower creditworthiness, loan structure, and covenants, as well as understanding market trends and interest rate exposure. While it can offer strong income opportunities, private debt is best suited for investors with a long-term horizon and the ability to manage illiquidity and credit risk.
The Cardiff Connection
William Stern, CEO of Cardiff, states that successful private debt investing requires a clear understanding of borrower creditworthiness, loan structures, and covenants, and emphasizes that due diligence is not optional. Due diligence is central to protecting returns and managing risk in illiquid markets. Stern also notes that investors must balance the potential for higher yields with the inherent risks of private lending, including credit and interest rate exposure.
These principles are the same ones Cardiff uses to help clients make informed borrowing and investment decisions, translating complex market dynamics into actionable guidance that aligns with long-term financial goals and risk tolerance.
