{"id":24500,"date":"2025-07-25T13:09:18","date_gmt":"2025-07-25T05:09:18","guid":{"rendered":"https:\/\/www.syfe.com\/magazine\/?p=24500"},"modified":"2025-07-30T15:42:33","modified_gmt":"2025-07-30T07:42:33","slug":"private-credit-why-accredited-investors-turn-to-debt-for-higher-yields","status":"publish","type":"post","link":"https:\/\/www.syfe.com\/magazine\/private-credit-why-accredited-investors-turn-to-debt-for-higher-yields\/","title":{"rendered":"Private Credit Explained: Why Accredited Investors Are Turning to Debt for Higher Yields"},"content":{"rendered":"\n
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What if the word \u201cdebt\u201d didn\u2019t signal something negative, but instead pointed to a powerful income-generating opportunity? Aman Pujara, Director of Quantitative Research and Portfolio Construction at Syfe, explains more.<\/h3>\n\n\n\n

That\u2019s exactly how more investors\u2014especially accredited investors in Singapore<\/strong>\u2014are starting to think about bonds and private credit<\/strong>. Amid ongoing equity market volatility, debt instruments are being re-evaluated not as burdens, but as building blocks of a more stable and diversified investment portfolio.<\/p>\n\n\n\n

In particular, private credit<\/strong> is quickly gaining traction as a source of attractive returns and consistent cash flow. Once limited to institutional investors and ultra-high-net-worth individuals, it\u2019s now more accessible than ever, thanks to digital investment platforms and strategic partnerships with global asset managers.<\/p>\n\n\n\n

If you\u2019re an accredited investor exploring ways to diversify your portfolio<\/strong>, this guide will break down what private credit is, how it differs from traditional fixed income, and why now may be the right time to get started.<\/p>\n\n\n\n

What Is Private Credit?<\/strong><\/h2>\n\n\n\n

At its core, private credit<\/strong> refers to loans made directly to companies by non-bank lenders. These loans are not traded on public exchanges<\/strong>, and the investment structures are often bespoke<\/strong>, tailored to suit the specific needs of both the borrower and the lender.<\/p>\n\n\n\n

Think of it this way: When you invest in private credit, you’re essentially acting as a lender<\/strong>, receiving interest payments over time and the return of your principal at the end of the loan term. Unlike traditional bank lending, these loans are typically arranged by alternative asset managers<\/strong> who specialise in structuring, monitoring, and managing these credit deals.<\/p>\n\n\n\n

The asset class has grown substantially in recent years. Following the 2008 Global Financial Crisis, stricter banking regulations meant that many mid-sized companies could no longer rely on banks for loans. <\/p>\n\n\n\n

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Enter private credit: a flexible financing solution that has since become a US$1.7 trillion global market<\/strong>, expected to reach US$3 trillion by 2028<\/strong>.<\/p>\n\n\n\n

For investors, this presents a compelling opportunity to tap into a relatively low-volatility asset class<\/strong> that can deliver consistently higher yields<\/strong> than traditional bonds or savings products.<\/p>\n\n\n\n

How Private Credit Differs From Traditional Bonds<\/strong><\/h2>\n\n\n\n

Private credit and traditional bonds both fall under the umbrella of debt investing<\/strong>, but they differ in several meaningful ways.<\/p>\n\n\n\n

Feature<\/strong><\/td>Public Bonds<\/strong><\/td>Private Credit<\/strong><\/td><\/tr>
Liquidity<\/strong><\/td>Highly liquid; traded on public exchanges<\/td>Illiquid; not traded publicly<\/td><\/tr>
Access<\/strong><\/td>Open to all investors<\/td>Historically limited to institutions or HNWIs<\/td><\/tr>
Return potential<\/strong><\/td>~3%\u20135% (investment-grade bonds)<\/td>Typically 8%\u201310%+ p.a.<\/td><\/tr>
Structure<\/strong><\/td>Standardised, transparent<\/td>Bespoke, negotiated terms<\/td><\/tr>
Risk profile<\/strong><\/td>Lower credit risk<\/td>Higher credit and liquidity risk, but often secured<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Private credit investors often benefit from structural protections<\/strong> such as collateral, interest rate floors, and covenants designed to protect the lender\u2019s capital. This added complexity often results in more favourable risk-adjusted returns<\/strong>, but it also means that due diligence is critical<\/strong> when choosing the right fund or platform.<\/p>\n\n\n\n

Why Accredited Investors Are Paying Attention<\/strong><\/h2>\n\n\n\n

Singapore is widely known as a nation of savers. But in today\u2019s low interest rate environment, simply leaving money in the bank is no longer enough to preserve\u2014let alone grow\u2014wealth. For accredited investors<\/strong> who meet the criteria set by the Monetary Authority of Singapore (MAS), private credit offers a rare combination of yield, stability, and diversification<\/strong>.<\/p>\n\n\n\n

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Here\u2019s why private credit is gaining popularity:<\/p>\n\n\n\n

1. Attractive Yield in a Low-Rate World<\/strong><\/h3>\n\n\n\n

With Singapore savings accounts offering minimal interest and T-bills seeing yields trend lower amid potential central bank rate cuts, private credit\u2014with target returns of 8\u201310% p.a.<\/strong>\u2014stands out.<\/p>\n\n\n\n

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2. Monthly Cash Flow<\/strong><\/h3>\n\n\n\n

Unlike equities, which may not pay dividends consistently, private credit investments typically deliver predictable monthly income<\/strong>, making them attractive for income-focused investors.<\/p>\n\n\n\n

3. Lower Volatility<\/strong><\/h3>\n\n\n\n

Because private credit deals aren\u2019t priced daily on public markets, their valuations don\u2019t fluctuate with market sentiment. That makes them a useful portfolio stabiliser<\/strong>, particularly during periods of equity market turbulence.<\/p>\n\n\n\n

4. Diversification<\/strong><\/h3>\n\n\n\n

Private credit adds exposure to non-correlated return streams<\/strong>, which helps reduce overall portfolio risk and dependence on stock market performance.<\/p>\n\n\n\n

What to Consider Before Investing<\/strong><\/h2>\n\n\n\n

While the benefits are clear, private credit isn\u2019t without its risks. Before committing capital, accredited investors should understand the unique characteristics<\/strong> of the asset class.<\/p>\n\n\n\n