The Rise of Private Credit

Exploring the shift from traditional bank lending to private credit funds in the corporate debt markets.

This case study examines the strategic decisions, market conditions, and leadership failures that contributed to the focal event. We will analyze the timeline of events leading up to the crisis and evaluate the regulatory response.

Background Context

In the years preceding the event, macroeconomic factors created an environment of easy money and relaxed oversight. Corporations levered up their balance sheets while investors chased yield in increasingly risky structured products.

• Interest rates at historic lows
• Lack of robust risk-management frameworks
• Over-reliance on short-term wholesale funding

The Catalyst

When market sentiment shifted, the fragility of the underlying business models was exposed rapidly. A liquidity crunch ensued, forcing asset fire sales and triggering a downward spiral in valuations across the sector.