alt Hacker News> Banks are lending to private equity firms to fund purchases of businesses
Not quite. Private credit is to debt what private equity is to equity. (Technically, any non-bank originated debt that isn't publicly traded is private credit. Conventionally, it's restricted to corporate borrowers.)
So bank exposure to private credit generally means banks lending to non-banks who then lend to corporate borrowers.
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> So bank exposure to private credit generally means banks lending to non-banks who then lend to corporate borrowers.
Isn't this similar in spirit to the infamous (according to Western media) Chinese shadow banking market? There are articles [1] more than 10 years old talking about the collapse of China because of that practice, but it looks like the US is all too happy to do a very similar thing. I also wonder how big of a market we're talking here, as I was too lazy to check. A few hundred billions? $1 trillion? $2 trillion? More?
[1] https://www.cnbc.com/2014/12/03/china-shadow-bank-collapse-e...
What does this typically look like? Who is the intermediary here between the bank and corporate borrowers - are these buy side created SPVs?