---
title: "Private Credit"
date: 2025-09-08
slug: private-credit
summary: "Private credit, explained by Howard Marks' team."
questionTitle: "What is private credit?"
tags: [Capital]
readingTime: "1 min"
legacyUrl: /blog/f/private-credit
linkedinUrl: ""
siteUrl: ""
audio: ""
phase: Fund
---

Private credit is everywhere in the headlines right now — and it’s particularly relevant for the energy transition. The podcast with Howard Marks & Oaktree’s private credit team highlighted 3 **misconceptions**:

1️⃣ **Lower volatility ≠ lower risk**
Business risks remain the same whether financed publicly or privately.
2️⃣ **Sponsor-backed ≠ always safer**
Sponsor = private equity–backed. Non-sponsor = independent/founder-owned. Each structure has pros and cons such as sponsors can bring scale while founders can bring stronger emotional and reputational commitment.
3️⃣ **Leverage ≠ uniform**
Leverage varies dramatically across private credit managers. Some managers use 0.8x debt-to-equity, others 1.75x. Used poorly, leverage destroys value:

"If you use leverage to enhance returns, you typically end up without a car"🚗 

**Why does it matter now**: Scaling energy transition requires scaling capital, and understanding some of these nuances separates thoughtful investors from those following the herd. Capitalism can solve planetary challenges. 

**Link** (Oaktree Capital | Insights Live: Howard Marks on Top Misconceptions About Private Credit) [https://lnkd.in/gh_PfPwM](https://lnkd.in/gh_PfPwM)

**________**

**Clean Power Whisperer™ Perspectives |**

Educational Insights on Risk, Insurance & Capital for AI, Energy, and Climate.