Private debt investing is a form of alternative investment that provides capital to companies or individuals in exchange for a fixed rate of return.

Private debt refers to debt securities that are not traded on public markets. Such debt can take many forms, including term loans, mezzanine financing, and real estate loans. It can be used by companies, real estate developers, and other borrowers to raise capital for a variety of purposes, such as expansion, acquisitions, or refinancing existing debt.

Private debt investments are typically secured by collateral, such as real estate or other assets, and offer higher returns than traditional investments. Most importantly, these investments can provide investors with a steady stream of income and the potential for capital appreciation.

Private debt carries a higher risk than traditional debt securities, such as bonds and Treasury notes. As such, most investors would require specialist financial services advice to consider private debt investments as such debts are generally issued by private companies and may have less transparency than public debt or bonds.

Private debt can be relatively illiquid investments, as it is not traded on public markets like bonds and may be harder to buy and sell. This means that it’s essential for investors to have a long-term investment horizon and be prepared to hold their investment until maturity.

Private debt carries a higher level of risk than traditional debt securities. However, they can offer higher returns than conventional debt securities and can provide diversification to an investment portfolio.

It’s important for investors to carefully evaluate the risk and return of private debt investments and consult with a financial advisor to determine if they are suitable for their portfolio. Due to the lack of liquidity and transparency, private debt may be more appropriate for high-net-worth and institutional investors rather than retail investors.