Private Credit Is the Hot New Thing, But Its Roots Go Back to 1980s Junk Bonds
Risky debt fueled the rise of private equity firms, and now the buyout barons are doing the lending too
Illustration: Giovanni Simoncelli for Bloomberg Markets
In the early 2000s, before I became a reporter, I worked for GE Capital, which made loans to companies owned by private equity firms. It wasn’t glamorous: I traveled to the suburbs of Milwaukee to kick the tires on a vitamin shop and oversaw a loan to a Christmas tree farm that the credit committee hated for being seasonal. When I tried to explain my job at parties, people gave me quizzical looks.
Flash-forward to September 2023. Stephen Schwarzman, the billionaire chief executive officer of investment giant Blackstone Inc., was speaking on a panel in Paris about the charms of making loans to companies—or, in the current argot, private credit. “If you can earn 12%, maybe 13% on a really good day,” he said, “what else do you want to do in life?”