Private credit has become one of the fastest-growing corners of finance.
But underneath the surface, it has some serious issues.
Around 11.5% of private credit loans now include PIK features, which is an increase of more than 72% percent since the end of 2021.
Meaning instead of paying interest in cash, the unpaid interest gets added to the loan balance, allowing the borrower to postpone payments while the debt continues to grow.
It creates a system where losses can keep growing, while everything still appears healthy on the surface.
#finance #stockmarket #investing #wallstreet
But underneath the surface, it has some serious issues.
Around 11.5% of private credit loans now include PIK features, which is an increase of more than 72% percent since the end of 2021.
Meaning instead of paying interest in cash, the unpaid interest gets added to the loan balance, allowing the borrower to postpone payments while the debt continues to grow.
It creates a system where losses can keep growing, while everything still appears healthy on the surface.
#finance #stockmarket #investing #wallstreet
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