Private-credit fears are based on four myths

IN CHARLES MacKay’s 1841 book Extraordinary Popular Delusions and the Madness of Crowds, he highlights how mass human behaviour can lead to irrationality: “They go mad in herds while they only recover their senses slowly, one by one.”

That line feels apt today amid a wave of intense conjecture in the media and elsewhere about the risks embedded in so-called private credit.

Private credit is privately negotiated loans and debt sold directly to long-term investors – an alternative to bank lending and publicly issued debt securities.