Both veterans and newcomers to the asset class are familiar with the basics of private debt benefits. Thanks to its premium yield over liquid credit and consistent returns across economic, rate, and market cycles, investors have moved briskly into non-traded credit since the GFC.

Still, as we’ve seen and heard on several continents and at many gatherings and conferences this year, there remain unanswered questions. In the past two weeks we’ve addressed timing and defaults. This week we wrap up with what seems to be the overriding issue – liquidity.

In a way, this concern is the most surprising. After all, isn’t it fundamental to the asset class? If you truly understand what makes private debt tick, then you know it’s not like liquid credit. There’s no ready secondary market because issue size is smaller, issues are private and not rated, and top arrangers are buy-and-hold managers.

Of course, illiquid doesn’t mean there are no buyers. As one leveraged loan veteran told us years ago, “I don’t want the stuff you’re selling, I want the stuff you’re keeping.” Our own capital markets team is at any one time working with lending partners on a dozen or so primary financings we’d be very comfortable holding for ourselves.