Understand private credit: It may be a word you will soon hear more often in the stock markets

It is called “shadow banking” for a reason. Private credit serves a purpose as it caters to borrowers who fall between bank underwriting standards and public market requirements. But it also carries structural weaknesses such as poor borrower quality, limited transparency, and subjective valuations. Despite all this, private credit is only growing. Is it a miracle market or a disguised catastrophe? The answer will be revealed only in times of stress.