Peter Szekely from Tanarra Credit Partners discusses the benefits of private credit investments for retail investors.
Tanarra Capital Partners’ corporate loan market provides a higher cash rate than equities and is secured, giving investors a gross yield of 10% for senior secured risks. With various protections and low volatility, private credit is a compelling investment on a risk-return basis.
It is especially important to build a piece of allocation in this market during significant economic volatility. Investors should consider private credit if they are comfortable having a high cash income and understand the safer part of the capital structure.
Peter advises to avoid investing anywhere with a large discretionary component, or in areas reliant on volatile commodities or affected by rate increases.
Defensive investments such as infrastructures, childcare assets, healthcare assets, and education are robust despite the higher interest rate burden of the companies.
It is expected that interest rates will remain high and a rush to cut rates will not occur, maintaining higher interest rate burdens for companies servicing interest. Private credit delivers a golden era as long as defensive companies can handle their interest rate burdens in higher interest rate environments.
