History reminds us that risks rarely announce themselves in advance—but disciplined portfolios built with hedges are better positioned when they do.

Private credit has grown rapidly over the past decade, evolving from a niche asset class into a multi-trillion-dollar segment of global credit markets.

As traditional banks have retreated from certain types of lending, private lenders have stepped in to fill the gap—bringing both opportunity and new risks for investors.

This paper examines the structural parallels between today’s private credit market and the conditions that preceded the Global Financial Crisis. It explores key issues including the migration of credit risk outside the banking system, incentive structures in loan origination, borrower quality, and the increasing use of payment-in-kind financing.

For advisors and portfolio builders evaluating the role of private credit in diversified portfolios, understanding these dynamics may be increasingly important.

Download the paper to explore the implications for portfolio risk management.