Private credit has grown rapidly, the U.S. market alone has surpassed $1.5 trillion, but the conditions underpinning that growth are increasingly being questioned. High leverage, the proliferation of covenant-lite structures, and a rising share of PIK income are prompting institutional investors to look more carefully at where risk is actually sitting in their portfolios.

At Lendable, we believe the current environment calls for a return to first principles: asset-backed lending, robust covenant structures, and cash-pay income with genuine transparency.

Our latest market insight examines the dimensions of this thesis:

Covenants: unlike the covenant-lite structures that have become standard in U.S. mid-market lending, Lendable maintains covenant-heavy frameworks with early warning indicators and dynamic collateral replenishment.

Real economy focus: we finance MSMEs, consumer finance providers, and payment platforms in emerging markets, rather than the technology-led transactions that carry significant exposure to equity volatility and AI-driven disruption.

Cash-pay discipline: while PIK and warrant structures have become more prevalent across the market, Lendable prioritises amortising, cash-pay structures that provide clear liquidity and align investor and borrower incentives.

In a period of heightened scrutiny, we believe disciplined, collateralised lending to the real economy offers genuinely uncorrelated, resilient outcomes for qualified investors.