Private Credit is paradise

After two years on a LevFin desk, you thought you were destined for private equity. You studied for the modeling tests, pretended to be interested in operational value creation, and even told yourself that you would enjoy portfolio work (despite having never spoken to an operator in your life). You fail to land a single PE offer, but then you read KKR’s iPhone moment piece on private credit, and suddenly, your entire perspective shifted.

Why would you chase deals when you could be the one deciding who gets funded? Why spend your life writing CIMs and bidding in auctions when private equity firms were now coming to lenders for money? You imagined yourself as the financial Steve Jobs, dictating terms, revolutionizing the market, and telling sponsors “no” like a benevolent deity.

Two weeks later, you were fully converted. You scrubbed “Private Equity Enthusiast” from your LinkedIn bio and started talking about “the shift in capital markets dynamics.” After three rounds of interviews where you aggressively nodded while repeating phrases like “capital solutions,” “non-sponsor lending,” and “first lien risk-adjusted returns”, you landed an offer at a top direct lending platform.

Your first day at the fund, you sat in a six-hour credit committee meeting where five MDs debated whether EBITDA adjustments should be 20% or 25% for a mid-tier HVAC distributor that nobody would remember in three years.

You quickly realized private credit was the ultimate gatekeeper. Investment banks groveled at your feet, trying to syndicate loans. Private equity sponsors begged for your capital, pitching you deals with horrifically inflated projections while assuring you their 7.0x levered buyout was “completely de-risked.” In IB, you lived to please the MD. Here? The MDs lived to please you. In banking, you spent your life tweaking PowerPoints for someone else’s approval. In private credit, the PowerPoint came to you.

At first, the work seemed too good to be true. The job was deceptively simple: Is this borrower going to default?, If they do, how badly will we get screwed?

Your first deal was a $300M unitranche loan for a low-growth industrial company owned by a mid-tier PE fund that barely cleared its fundraising target. You spent two weeks combing through their aggressive sponsor-adjusted EBITDA, only to realize they were adding back hope and prayers to their earnings.

You pointed out that 90% of the revenue was from one customer, that the CFO mysteriously left last month, and that their cash conversion cycle looked like a Ponzi scheme. You told your MD that this was one bad quarter away from disaster.

The sponsor smiled, nodded, and hit you with: “We hear you. But this is a high-quality asset with strong tailwinds.”

You expected your MD to laugh them out of the room. Instead he says: “Okay, let’s run sensitivities at 6.5x leverage instead of 7x.” A few emails later, the loan was approved.

As time passed, you noticed the pattern. Every deal was basically the same: A PE firm overpays for a business, They load it up with debt and call it “sophisticated capital structuring”, They convince lenders the company has “high recurring revenue” (despite 40% customer churn), Private credit funds fight to lend because everyone needs to put money to work, Everyone agrees on terms slightly worse than what the credit committee originally wanted.

Six months later, the company misses projections, and suddenly your “strong downside protection” is looking pretty weak. You start to wonder if this is just a one-off bad deal. Then, you realize this happens in every single deal.

Your MDs keep saying “our portfolio is performing well,” even as half the companies are barely covering interest payments. The credit committee keeps talking about “prudent underwriting,” even though you just approved a covenant-lite loan to a mattress retailer with declining sales.

Despite all of this, you told yourself the lifestyle made up for it. Sure, there were some late nights when a sponsor demanded term sheets by the next morning, but most of your time was spent muting yourself on credit committee calls while scrolling Twitter.

And when things got slow, you could always pretend to be a macro expert on LinkedIn by posting something like: “With rising interest rates, private credit is at an inflection point. Lenders who can navigate this environment will emerge stronger than ever.” This would get 12 likes, three comments, and zero actual consequences.

On countless hinge dates you find yourself explaining the difference between private equity and private credit to anyone who would listen. “People don’t realize this,” you’d say confidently, “but we’re actually in the golden age of private credit.”

Your date would nod politely, sip their drink, and subtly check their phone. One even asked, “So… do you own a business?”You had to pause for a moment before responding: “No, but I finance them.” She excused herself to the bathroom and never came back.

Then came bonus season. Your MD collected a high 6 figures for approving deals that will be a problem in three years. Your bonus? Enough to afford Equinox, but not enough to retire early. Still, you convinced yourself it was fine because private credit was the future. The banks were retreating. The private markets were expanding. You actually had job security compared to banking.

Then, one morning, it happened.The economy slowed down. Interest rates kept rising. Your portfolio started looking like an episode of Kitchen Nightmares. Companies stopped covering interest payments. Sponsors ghosted you like a bad Hinge date.

Suddenly, all the “high recurring revenue” businesses were “undergoing a temporary transition.” The “non-cyclical” companies were “adapting to new demand challenges.” Every covenant-lite loan you approved was now coming back to haunt you.

And then, in the middle of a restructuring call, it finally hit you.

You weren’t a modern-day loan shark. You weren’t the Steve Jobs of finance. You weren’t a sophisticated capital allocator. You were just an overpaid regional bank.