What is the role of private debt on Wall Street?

Private debt plays a significant role on Wall Street as it is an alternative asset class that allows investors to invest in privately held companies. Private debt investments are loans provided to these privately held companies, usually with the aim of providing working capital, financing expansion or financing acquisitions.

Wall Street firms, such as private equity firms, hedge funds, and asset management companies, use private debt as a way to diversify their portfolios, generate alpha, and provide attractive risk-adjusted returns to their investors. Private debt funds typically invest in the debt of companies that do not have access to public markets or are unable to secure financing through traditional lending institutions.

Private debt has become increasingly popular in recent years due to low-interest rates and the search for yield in a low-yield environment. However, investing in private debt can be riskier than investing in public markets, as the investments are illiquid and the lack of transparency can make it difficult to accurately assess risk.