Private Debt Is Far Broader Than Private Credit

RBC BlueBay argues that many investors treat private debt and private credit as interchangeable, despite private credit representing only one segment of a much larger universe that includes infrastructure debt, real estate lending, asset-backed finance and distressed credit strategies.

• The report contends that rising rates, narrowing spreads and increasing competition are reducing the attractiveness of traditional senior secured direct lending relative to other private-debt opportunities.
• Private debt returns are generated through multiple sources of premium, including credit risk, illiquidity, complexity and strategy-specific characteristics that differ substantially across sub-sectors.
• RBC proposes a framework built around five questions—portfolio role, risk drivers, stress performance, implementation requirements and compensation for risk—to help investors construct more deliberate allocations across the private-debt landscape.

Read the full paper for a comprehensive overview of private-debt strategies, portfolio construction considerations and emerging opportunities beyond traditional private credit.