Why the Next Decade Belongs to Private Credit - And How You Can Access It
- Steadfast Equity
- Jun 26
- 14 min read
Private credit is booming, with assets projected to grow from $1.5 trillion in 2024 to $2.8 trillion by 2028. It offers higher yields, floating rates, and tailored terms - making it an attractive alternative to traditional fixed-income investments. Here's why private credit is growing and how you can access it:
- What is Private Credit? Privately negotiated loans between borrowers and non-bank lenders, offering flexibility and higher returns.
- Why Now? Post-2008 regulations tightened bank lending, creating a gap filled by private credit firms.
- Investor Benefits: Higher yields, diversification, and inflation protection through floating rates.
- Borrower Appeal: Quick funding, tailored terms, and no equity dilution.
- Access Options: Platforms like Steadfast Equity offer fixed, contractual returns (10%-16.5% APY) with investment minimums starting at $50,000.
Private credit is reshaping corporate lending and investment portfolios. Dive into the details to see how it can fit into your strategy.
How Private Credit Became One of the Hottest Investments on Wall Street
Market Forces Driving Private Credit Growth
The private credit market is experiencing significant growth, fueled by shifts in the economy, regulatory changes, and evolving borrower preferences. With private credit assets under management already hitting $1.6 trillion, projections suggest this figure could climb to $2.7 trillion by 2029. These trends are paving the way for major industry transformations, as outlined below.
Economic and Regulatory Changes
Regulatory changes have reshaped traditional lending markets, opening doors for private credit firms to step in. For example, Basel III Endgame regulations have pushed banks to scale back, leading to notable partnerships like Citigroup's $25 billion deal with Apollo Global Management and Wells Fargo's $5 billion collaboration with Centerbridge Partners.
At the same time, private credit is becoming more accessible to a broader range of investors. Vehicles like business development companies (BDCs), interval funds, and tender offer funds now manage over $400 billion in assets. Additionally, asset-based lending is expanding as private lenders explore opportunities in areas traditionally dominated by banks.
High-Demand Sectors
Building on these regulatory shifts, private credit firms are targeting high-demand sectors such as corporate and commercial financing, infrastructure development, and consumer lending. The growth potential is staggering - seven of the largest private credit firms estimate the total addressable market to be around $31 trillion. In 2022 alone, there were 51 debt deals valued at $1 billion or more, a sharp increase from 2020's numbers.
Direct lending remains a cornerstone of private credit, accounting for nearly half of the assets under management. However, firms are also branching out into newer asset classes like infrastructure finance and asset-backed finance. Geographic diversification is another driver of growth. While North America continues to dominate, the Asia-Pacific region is emerging as a fast-growing market for private debt.
Private Equity and Borrower Needs
Private equity firms are playing a crucial role in driving private credit growth. Since 2019, the unrealized value and available capital (dry powder) in private debt have surged by 94%. Borrowers are increasingly drawn to private credit for its speed, flexibility, and tailored funding solutions.
Market consolidation is also reshaping the industry. Notable deals include Blue Owl's $450 million acquisition of Atalaya Capital Management in September 2024 and BlackRock's $12 billion all-stock acquisition of HPS Investment Partners in December 2024. These transactions reflect a trend toward larger, more established funds taking the lead.
Private credit firms are also adopting a more integrated approach, creating value for all stakeholders. By fostering a collaborative ecosystem among credit originators, borrowers, and investors, private credit is evolving beyond a niche alternative. It is solidifying its role as a key component of the modern financial system, underscoring its growing importance in today's economy.
How to Access Private Credit Opportunities
The private credit market, valued at about $2 trillion as of late 2023, offers various ways for investors to explore higher yields and diversify their portfolios. Knowing these options can help investors make better decisions about entering this rapidly growing space.
Key Private Credit Strategies
Private credit encompasses a range of investment strategies, including direct lending, mezzanine debt, asset-based financing, specialty finance, infrastructure debt, structured credit, and distressed debt. Among these, direct lending is the largest segment. It involves non-bank lenders offering loans directly to mid-sized businesses, often providing spreads 200 to 600 basis points higher than those in public markets.
Mezzanine debt combines debt and equity characteristics, often including warrants, to provide steady income with potential upside. Asset-based financing secures loans with collateral like real estate, aviation equipment, or machinery. Specialty finance focuses on niche sectors such as litigation finance, royalties, aircraft leasing, and trade finance, often delivering higher returns. Infrastructure debt supports projects in energy and utilities, while structured credit - through products like collateralized loan obligations (CLOs) and asset-backed securities (ABS) - offers exposure to diversified pools of private credit assets. Distressed debt strategies target the debt of struggling companies, aiming for significant returns via restructuring or liquidation.
Most private credit investments feature floating rates, offering some protection against interest rate shifts. However, these investments usually come with reduced liquidity.
Steadfast Equity's Approach to Private Credit
Steadfast Equity simplifies private credit investing through its structured bond platform, which provides fixed, contractual returns instead of fluctuating projections.
"When we issue a bond at 12%, you earn 12% - contractually. It’s fixed. It doesn’t matter if markets crash or the headlines turn red - you get paid what we said you’d get paid. No hedging, no disclaimers, no guesswork."
The platform manages over $800 million in assets with liabilities under $200 million and has maintained a flawless track record for payments on its promissory notes and bonds [15, 17]. It’s available to both accredited and non-accredited investors, with a minimum investment requirement of $50,000 and additional contributions allowed in $10,000 increments. Investors can also use retirement accounts by rolling funds into a Self-Directed IRA.
For those seeking a hybrid structure, Steadfast Equity’s DualYield™ Bonds allow investors to divide returns between monthly income and compounded growth. However, this option requires a minimum investment of $200,000. The firm’s investment strategy leans toward high-growth sectors like artificial intelligence, which is projected to grow at a 35.9% compound annual growth rate (CAGR) from 2025 to 2030. As Steadfast Equity explains:
"We invest in AI not to replace people - but to augment productivity, drive economic growth, and future-proof our portfolio against structural shifts already underway."
Comparing Steadfast Equity Bond Options
Steadfast Equity offers several bond options tailored to different timelines and income goals:
Duration | Monthly Income APY | Total Return | Compounded APY | Total Return |
1 Year | 10.00% | +10.00% | 12.50% | +12.50% |
3 Year | 11.00% | +33.00% | 13.50% | +36.76% |
5 Year | 12.00% | +60.00% | 14.50% | +96.80% |
8 Year | 13.00% | +104.00% | 15.50% | +211.23% |
12 Year | 14.00% | +168.00% | 16.50% | +628.95% |
Higher investment amounts unlock additional yield bonuses, starting with a +0.5% boost for $200,000 and scaling up to +3.0% for investments of $5 million. Historically, Steadfast Equity bonds have delivered annual yields between 9.0% and 18.5%, with some limited series achieving even higher returns. The firm also reserves the option to repay bonds early to safeguard its portfolio’s long-term health. Transparency remains a priority, with rigorous SEC filings and adherence to strict compliance standards.
Risk Assessment and Ethical Investing
As private credit continues to shape investment portfolios, evaluating risks and upholding ethical standards are critical for achieving its potential returns. Higher yields come with the need for thorough risk management.
Private Credit Risk Factors
Credit quality stands out as the primary risk in private credit. Unlike public markets where standardized credit ratings are available, private credit demands a more detailed analysis of a borrower's financial health, cash flow stability, and competitive position. With the private credit market expanding to over $1.7 trillion in assets under management within five years, heightened competition has, at times, led to more lenient underwriting practices.
Illiquidity is another major concern. Private credit investments often require locking up capital for extended periods, with limited options for selling positions in secondary markets. This makes it challenging for investors to exit during periods of market stress or personal financial changes. As of September 2024, the combined unrealized value and dry powder in private debt reached $1.05 trillion.
Economic cycles also play a significant role in shaping private credit performance. Middle-market companies, which are the typical borrowers in this space, face heightened default risks during economic downturns. Factors like geopolitical uncertainty, fluctuating interest rates, and sector-specific disruptions can significantly impact portfolios. Dan Pietrzak, Global Head of Private Credit at KKR, highlights the importance of discipline in this space:
"At the end of the day, private credit is a storage business. This isn't trading - we own these loans until we get repaid. So, structure, documentation, and fundamental risk are our north stars. Spreads have compressed, but we've generally seen covenants and security packages hold up. We're leaning into that discipline."
Valuation transparency remains a persistent issue. Unlike public securities with daily pricing, private credit relies on internal models and periodic assessments, which can obscure problems until they escalate. Leading firms, however, are addressing this challenge. Pietrzak explains:
"We use independent, third-party valuation providers - just as banks do - and I'd expect most large platforms in our space to follow suit."
Given these risks, ethical practices are essential for long-term success in private credit.
Responsible Investment Practices
Incorporating ESG (Environmental, Social, and Governance) factors into private credit investments has become increasingly important. Responsible lenders evaluate borrowers' environmental impact, labor practices, and governance structures as part of their decision-making process.
Environmental responsibility involves analyzing borrowers' carbon emissions, waste management, and adherence to environmental regulations. Climate-related risks are becoming a growing concern for credit quality and portfolio longevity.
Social impact focuses on how borrowers treat their workforce, manage community relationships, and ensure product safety. Companies with strong social practices often demonstrate greater operational stability and reduced reputational risks.
Governance quality examines management integrity, board effectiveness, and financial transparency. Firms with strong governance structures are generally better positioned to meet their financial obligations and avoid defaults.
Steadfast Equity exemplifies this approach by prioritizing transparency and ethical standards. The firm adheres to strict SEC compliance and provides clear, contractual return commitments. Their investment strategy balances a focus on high-growth sectors, such as artificial intelligence, with a commitment to ethical practices.
Top private credit managers also rely on dedicated teams for portfolio monitoring, legal support, and issue resolution. As Pietrzak notes:
"We are not afraid to walk away from deals that don't meet our terms. Ultimately, it is a borrower-friendly market, but that is more a reflection of spread compression, which has been driven by a lack of supply amid very high demand. Thus far, I think the market has done a nice job of holding its ground on maintaining collateral protections."
Risk vs. Benefit Breakdown
A clear understanding of the trade-offs in private credit investing helps investors align their strategies with their risk tolerance and goals.
Risk Factor | Potential Impact | Mitigation Strategy | Benefit Opportunity |
Credit Quality | Default losses of 2-5% annually | Rigorous due diligence, diversification | Higher yields than public markets |
Liquidity Constraints | Capital locked for 3-12 years | Matching investment timeline to needs | Illiquidity premium of 200-600 basis points |
Economic Cycles | Performance volatility during downturns | Stress testing, defensive positioning | Floating rates provide inflation protection |
Valuation Opacity | Delayed recognition of problems | Independent valuation providers | Access to proprietary deal flow |
Concentration Risk | Sector-specific losses | Geographic and industry diversification | Specialized expertise in niche markets |
The asset-based finance market, now exceeding $6 trillion, is expected to surpass $9 trillion, offering opportunities for investors who can navigate these risks effectively.
Strong documentation and structure are key to managing risks in private credit. Covenant packages, collateral positions, and clear legal agreements safeguard investors when borrowers face challenges. Skilled managers maintain discipline in these areas, even in a competitive market.
Diversification strategies also play a critical role in reducing risk. By spreading exposure across direct lending, asset-based finance, and specialty finance sectors, investors can minimize portfolio volatility. Geographic and industry diversification further help mitigate concentration risks.
When investors partner with experienced managers who emphasize transparency, ethical practices, and proactive risk management, private credit can become a compelling addition to a well-rounded investment portfolio. This structured approach ensures a balance between risk and reward, laying the groundwork for effective strategies.
Step-by-Step Guide for U.S. Investors
If you're a U.S.-based accredited investor looking to access private credit through Steadfast Equity, it's important to have a clear plan. This guide will walk you through the key steps, from setting your investment goals to navigating the platform.
Setting Investment Goals and Risk Limits
Start by defining your financial objectives and understanding your risk tolerance. Risk tolerance reflects both your comfort level with potential losses and your actual financial ability to take risks. Investors generally fall into three categories: aggressive, moderate, or conservative.
Several factors influence risk tolerance, including your income, investment timeline, portfolio size, and access to other assets. Nevenka Vrdoljak, a senior quantitative analyst at Merrill and Bank of America Private Bank, highlights the dual nature of risk:
"People tend to focus just on their comfort level with risk. But your to take risks based on your financial situation is just as important."
Your timeline is also crucial. Longer investment horizons often allow for more risk, as there's more time to recover from losses. Private credit investments typically require fixed-term commitments, making it essential to align your timeline with the terms of your investment.
The size of your portfolio and your overall financial position play a big role, too. Investors with larger portfolios might be more willing to take on higher risks, while those with fewer resources may need to focus on preserving capital. Anil Suri, an executive at Merrill and Bank of America Private Bank, explains this balanced approach:
"Considering both your willingness and your financial ability to take on risk is the best way to make asset allocation choices that work for you."
With private credit assets under management projected to hit $3 trillion by 2028, and 42% of institutional investors in the U.S. and Canada planning to increase their allocations to private debt in the next three years, having clear, well-defined goals is critical in this expanding market.
Once your goals are set, it's time to understand the U.S. tax and legal framework to ensure your strategy is sound.
U.S. Tax and Legal Requirements
Navigating the tax and legal landscape is a key step for U.S. investors entering private credit markets. The regulatory framework has evolved significantly, with private credit growing more than tenfold since 2007. By 2028, the market is expected to surpass $2.8 trillion.
To participate, you need to qualify as an accredited investor, a status verified through SEC filings and documentation.
Tax considerations for U.S. investors are generally straightforward compared to the complexities faced by foreign investors. Still, it’s important to understand how private credit returns fit into your portfolio’s tax structure.
Self-Directed IRAs (SDIRAs) offer a tax-advantaged option for investing in private credit. Providers like The Entrust Group or Equity Trust allow you to use retirement funds for these investments, potentially deferring or even eliminating taxes on returns, depending on whether you use a traditional or Roth IRA.
Reporting requirements include receiving tax documents from your investment manager. Steadfast Equity ensures compliance with SEC regulations and provides clear documentation for tax filing purposes.
Legal structures also matter. Steadfast Equity isolates risk by using separate entities for each bond offering, ensuring clear accounting and added legal protection. While the firm operates internationally to optimize tax efficiency, U.S. investors in domestic offerings won’t face additional tax complications.
Using Steadfast Equity's Platform
With your goals and legal preparations in place, you can begin investing through Steadfast Equity. The platform is built on a foundation of regulatory compliance and a consistent track record of payments.
Investment thresholds and options:
Term Length | Monthly Payment Option | Compounded Option | Minimum Investment |
1 Year | 10.0% APY | 12.5% APY | $50,000 |
3 Years | 11.0% APY | 13.5% APY | $50,000 |
5 Years | 12.0% APY | 14.5% APY | $50,000 |
8 Years | 13.0% APY | 15.5% APY | $50,000 |
12 Years | 14.0% APY | 16.5% APY | $50,000 |
Steadfast Equity also offers DualYield™ Bonds, a proprietary structure requiring a $200,000 minimum investment. These bonds combine monthly income with compounded growth, providing a unique blend of cash flow and long-term wealth-building opportunities.
The company’s bond offerings feature contractually defined returns, which are not tied to company performance. This approach ensures a predictable income stream, and with a 100% on-time payment history, the firm has demonstrated reliability.
Liquidity considerations are worth noting. While investments are fixed-term, Steadfast Equity maintains liquidity reserves for emergencies, offering some flexibility without compromising the investment structure.
Due diligence includes contacting Steadfast Equity directly at 646-585-1241 to discuss investment options and purchase contracts. The firm emphasizes ethical practices and mutual respect in its investor relationships.
Scaling your investment is possible as you gain confidence in the platform. Starting with the $50,000 minimum allows you to evaluate performance and service quality before committing larger amounts. Many investors increase their positions over time as they become more comfortable with the structure and returns.
The platform is exclusively for accredited investors, ensuring access to high-quality assets. For those who don’t yet meet the criteria, exploring alternative options may open doors to private credit opportunities in the future as regulations and personal circumstances change.
Conclusion: The Case for Private Credit Investment
Private credit has experienced remarkable growth, expanding from US$1 trillion in 2020 to US$1.5 trillion by early 2024. Projections suggest it could reach US$2.6 trillion by 2029, with an addressable market exceeding US$30 trillion. The consistent performance of private credit funds speaks volumes - just in 2023, they deployed around US$2 trillion in capital. As Daniel Pietrzak, Global Head of Private Credit at KKR, aptly puts it:
"Private credit is doing exactly what investors hoped it would in a year like this: providing strong, floating-rate yield and acting as a shock absorber from market volatility."
The appeal of private credit lies in its ability to deliver higher returns while maintaining a lower correlation to public markets. This unique combination makes it an excellent tool for diversification, allowing investors to benefit from illiquidity and complexity premiums while mitigating overall portfolio risk.
Institutional investors are taking notice, with insurance companies increasingly allocating capital to private credit. This shift aligns well with their need to match long-term liabilities to steady, contractual income streams.
For individual investors, platforms like Steadfast Equity offer a straightforward way to tap into these opportunities. With fixed, contractually guaranteed returns ranging from 10.0% to 16.5% APY across various term lengths, Steadfast Equity eliminates the guesswork associated with "targeted" or "projected" returns.
Ethical considerations also play a central role in Steadfast Equity’s approach. Their commitment to responsible capital deployment is clear:
"We actively avoid deploying our capital or financial expertise in ways that could enable harm, whether that's criminal activity, exploitation, or industries fundamentally misaligned with our mission."
Additionally, tax-advantaged options, such as Self-Directed IRAs, make private credit an accessible choice for retirement planning.
The current market landscape - shaped by regulatory changes, tighter bank lending, and growing demand for alternative financing - provides fertile ground for private credit’s continued expansion. However, disciplined risk management and rigorous underwriting remain essential to navigating this evolving space.
For U.S. investors seeking steady income and enhanced portfolio diversification, private credit through platforms like Steadfast Equity offers a compelling blend of yield, stability, and growth potential. Now is the time to explore how private credit can play a transformative role in your investment strategy.
FAQs
What are the main risks of investing in private credit, and how can you manage them effectively?
Investing in private credit carries some risks, with illiquidity being one of the most prominent. Since these investments generally don’t have a secondary market, selling your stake quickly - or at a good price - can be tough. Another major concern is borrower default, as private credit borrowers often have high debt levels and may face difficulties during economic slumps or when interest rates climb.
To address these challenges, it’s wise to diversify your private credit portfolio across different industries, regions, and borrower profiles. This reduces the impact of any single risk factor. Take the time to perform thorough due diligence to evaluate the creditworthiness of borrowers, and establish strong risk management practices, like regular performance reviews. These steps can help you navigate private credit investments and work toward achieving solid returns.
How can private credit help protect your investments from inflation compared to traditional fixed-income options?
Private credit stands out as a strong choice for protecting against inflation compared to traditional fixed-income investments, thanks to its floating interest rates. These rates adjust as market conditions change, helping to safeguard real returns even when inflation rises.
On top of that, private credit often delivers higher yields than traditional fixed-income securities. This is partly due to the illiquidity premium investors receive for committing to less liquid assets. Together, the floating rates and enhanced yields make private credit an appealing option for those aiming to maintain their purchasing power in inflation-sensitive portfolios.
How can U.S.-based investors start investing in private credit with Steadfast Equity?
To start investing in private credit with Steadfast Equity, U.S.-based investors need to first confirm they qualify as accredited investors. This typically means having a net worth of over $1,000,000 (not counting the value of your primary home) or meeting specific income requirements. Meeting these criteria is essential to gain access to private credit opportunities.
Once accredited, you can explore the private credit options offered by Steadfast Equity. Take the time to carefully review the platform’s investment choices, risk levels, and any associated fees. It’s crucial to conduct thorough research to ensure the investments match your financial goals and comfort with risk. For additional guidance, consider consulting a financial advisor who can help you make informed decisions and build a diversified portfolio that suits your needs.
