About this episode
Private debt is a $1.6 trillion market that’s critical to our economy and to investors—and it’s rapidly evolving. As banks have retreated from certain kinds of lending, private lenders have stepped in to fill the gap, allowing investors to reap the potential rewards.
Join Chief U.S. Economist Lara Rhame, Head of Credit Wealth Solutions Rob Hoffman, and Executive Director of Research Andrew Korz for an initial dive into the private debt market, including the fundamentals of the asset class, recent trends that have fueled its growth and a discussion around the investment case for private debt today.
Transcript excerpt
Lara Rhame: Welcome back to FireSide, a podcast from FS Investments. I’m Lara Rhame, Chief U.S. Economist, and today we’re going to talk about a $1.6 trillion market, one that is rapidly evolving and is critical to our economy and to investors—it’s private debt. I’m pleased to be joined by Robert Hoffman, a Managing Director and Head of Credit Wealth Solutions. Rob, it’s a rare treat to have you in the office these days. You’ve been out on the road a ton, talking to investors and advisors. Welcome.
Rob Hoffman: Thank you very much. It’s always great to be here.
Lara Rhame: Also in the studio is Andrew Korz, an Executive Director on the research team. And you’ve recently coauthored an incredible paper on this topic. I’m going to give several commercials for it throughout this podcast today but if you are interested in private debt, you will want to give it a read. Andrew, welcome.
Andrew Korz: Thank you, Lara. They keep me cooped up in the office, much more so than Rob. So, they don’t let me out much.
Rob Hoffman: I was there once. They set me free.
Lara Rhame: All right, Andrew, I’m gonna pitch the first question to you because I know that there has been a lot of buzz around this space and this asset class, but take us through sort of the 101, what is private debt?
Andrew Korz: Yeah, I think it’s smart to start there because it has changed and shifted over time as the asset class has grown. So private debt, just to kind of set the baseline, private debt is just the debt of a private company or a borrower that’s extended by, or held by, a non-bank lender. Very simply, that’s the broadest definition.
People frequently use private debt and private credit interchangeably. Private credit is, again, the most commonly cited part of private debt, but it’s more specifically directly originated loans to corporate borrowers. So, I think it’s helpful to kind of frame out the private debt market more broadly.
