• 6 min read
• Published on 25 July 2025
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View the full Basket:Banks in Private Credit
Let’s be honest, banking isn’t typically the most thrilling topic at the dinner table. It’s a world of grey suits, sensible shoes, and regulations so dense they could be used as doorstops. Yet, beneath that placid surface, something genuinely interesting is happening. A quiet revolution is underway in the trillion-dollar world of corporate lending, and the big banks, after years of sitting on the sidelines, are finally crashing the party.
For me, this is one of the most significant shifts in finance since the 2008 crisis. For years, if a medium-sized business wanted a loan, it went to a bank. The process was rigid, slow, and about as flexible as a concrete girder. A niche alternative existed, known as private credit, where specialist funds offered more bespoke, albeit more expensive, financing. Now, that niche is exploding into the mainstream, and the traditional banks are scrambling to get a piece of the action.
View the full Basket:Banks in Private Credit
So why the sudden interest? Well, post-2008 rules made certain types of lending a headache for traditional banks. This pushed companies towards private lenders, and the market ballooned. Now, seeing the eye-watering sums involved, the giants of Wall Street and the City of London are piling in.
Take Goldman Sachs, for instance. Through its Business Development Company, or BDC, it’s now a major player in lending to the very middle-market companies it might have once ignored. Blackstone, another behemoth, is doing much the same with its secured lending fund. It seems the old guard has realised there’s a fortune to be made by being a bit more flexible. This isn't just competition, it’s a fundamental change in how capital flows from those who have it to those who need it to grow.
View the full Basket:Banks in Private Credit
This is all very interesting for the pinstriped financiers, but what does it mean for the everyday investor? The most direct route into this world is through those Business Development Companies I mentioned. A BDC is a rather clever structure. It’s a company that invests in the debt of private businesses, and by law, it must pay out at least 90% of its taxable income to shareholders. This often results in some rather attractive dividend yields, especially in a world where a decent return can be hard to find.
These companies sit at a fascinating crossroads. They could benefit from the overall growth of private credit and also from the institutional heft of their parent companies. It’s a theme that captures a structural shift in the market, bundling together key players in this evolving space. You can see this approach in thematic portfolios like the Banks in Private Credit basket, which groups companies poised to ride this wave. Of course, any potential reward comes with risk.
View the full Basket:Banks in Private Credit
Now, before you get too excited, let’s pour a little cold water on things. Private credit is not a free lunch. These are loans to companies that often can’t get traditional bank financing for a reason. They might be smaller, more leveraged, or operating in a trickier sector. If the economy hits a rough patch, these are the types of businesses that could struggle first, and loan defaults could certainly impact returns.
Furthermore, these investments are not like shares in a blue-chip company that you can sell in a heartbeat. They are typically illiquid. And while the floating-rate nature of these loans can be a hedge against inflation, those same rising rates put more pressure on the borrowers to make their payments. It’s a delicate balancing act, and success depends entirely on the skill of the managers picking the loans. It’s a field where caution and careful due diligence are not just advisable, they are essential.
View the full Basket:Banks in Private Credit
View the full Basket:Banks in Private Credit
View the full Basket:Banks in Private Credit
View the full Basket:Banks in Private Credit
View the full Basket:Banks in Private Credit
View the full Basket:Banks in Private Credit
This article is marketing material and should not be construed as investment advice. No information set out in this article be considered, as advice, recommendation, offer, or a solicitation, to buy or sell any financial product, nor is it financial, investment, or trading advice. Any references to specific financial product or investment strategy are for illustrative / educational purposes only and subject to change without notice. It is the investor’s responsibility to evaluate any prospective investment, assess their own financial situation, and seek independent professional advice. Past performance is not indicative of future results. Please refer to our Risk Disclosure.
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