Introduction to Private Credit

As of March 2024 – Unless otherwise stated

Private Credit offers potential for portfolio diversification, enhanced yield, and attractive risk-adjusted total returns.

Why Private Credit?

Private credit can complement traditional fixed income strategies by offering enhanced income generation, historically lower volatility, the potential for total return enhancement, and diversification.

What Is Private Credit?

Private Credit refers to loans made to borrowers that are originated outside of the traditional banking system or public fixed income markets.

1.These loans are generally floating rate, and do not trade publicly on an exchange
2.The category covers a wide range of loans in various industries. These loans can be first lien/senior secured loans all the way down to junior debt that is unsecured
3.Collateral and terms for these loans can vary greatly from loan to loan and are highly customizable based on the borrower’s needs
Key Private Credit Sectors

The universe of private credit strategies has been expanding and diversifying

Private vs. Public Credit

Credit refers to much more than one type of bond or investment as it encompasses a spectrum of different categories across the private and public markets

Structural Changes are making Private Credit markets harder to ignore

Private credit markets have grown from under $800bn in 2013 to over $2.8tn in 2023, and are expected to continue to expand at a rapid trajectory

Notes:
1. Source of data is Preqin, June 2023
2. “CAGR” is defined as Compound Annual Growth Rate | Projected CAGR based on annualized data from H1 2023
Timing of Capital Deployment Can Affect Investment Outcomes

Loan terms, yields, and spreads evolve through a cycle and have significantly improved for lenders in 2023 relative to prior three years, potentially driving returns higher over time

Why Borrowers Turn to Private Markets as a Source of Funding

Benefits can include certainty and speed of execution — an attractive feature in volatile public markets – as well as confidentiality in avoidance of broad dissemination of proprietary information

1. NCM estimates based on observations and commentary from NCM’s investment partners ACORE, Atalaya, Maranon, and Medalist as of January 10, 2024
Ways to Access Private Credit
Disclosures
Nomura Capital Management LLC (“NCM”) is a registered investment adviser. The information set forth within this publication, or in any of NCM’s market commentaries or similar writings or publications, is for informational purposes only and does not constitute financial, investment, tax or legal advice. This information within this publication is intended to be informational and educational in nature and, by receiving this communication, you agree with its intended purpose described above. The views and/or strategies described in this communication may not be suitable
for all investors. Prior to making any investment or financial decisions, an investor should seek individualized advice from personal financial, legal, tax and other professionals that consider the particular facts and circumstances of an investor’s own situation. All investments are subject to varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy or product referenced directly or indirectly in this communication will be profitable, perform equally to any corresponding indicated historical performance level(s), or be suitable for your portfolio.

These materials reflect the opinion of NCM on the date of production. Opinions and statements of financial market trends that are based on current market conditions constitute our judgement and are subject to change without notice. Past performance does not guarantee future results. Where data is presented that is prepared by third parties, such information will be cited, and these sources have been deemed to be reliable. However, NCM does not independently verify or otherwise warrant the accuracy of this information. All investments are subject to risks, including the risk of
loss of principal.