Guggenheim Investments is working to launch a non-traded business development company, according to President Dina DiLorenzo [1].
The move signals a strategic expansion into private credit, a sector that allows investment firms to provide loans to small and mid-sized companies without using public markets. By utilizing a business development company structure, Guggenheim can offer a specific vehicle for these types of private credit investments.
DiLorenzo said the firm's strategy Wednesday during the Milken Institute Global Conference in Beverly Hills, California [1]. She said the firm is leaning into these structures to better capture the growth of the sector.
"Private credit is an important asset class," DiLorenzo said [1].
The decision to pursue a non-traded BDC allows the firm to manage the investment vehicle without the volatility associated with daily trading on a public exchange. This structure is often used by asset managers to provide more stable, long-term capital to borrowers, while offering investors a way to access private markets.
Private credit has seen increased interest as traditional bank lending has shifted and investors seek higher yields than those typically found in public bonds. Guggenheim's entry into this specific BDC format aligns with a broader trend of large investment firms creating dedicated products for private debt.
“"Private credit is an important asset class."”
The shift toward non-traded BDCs indicates a growing preference among institutional investors for private credit over traditional public debt. By avoiding the public markets, Guggenheim can reduce short-term price volatility and maintain more direct control over the loan portfolio, reflecting a wider industry trend of 'privatizing' credit markets.
