Kilde<\/a><\/p>\n\u00a0<\/p>\n
The Argument<\/p>\n
The argument is that allocators should evaluate private credit from the inside out. A pitch book can show performance, portfolio snapshots, and attractive language. It cannot, by itself, prove underwriting discipline.<\/p>\n
To assess a private credit manager properly, allocators should ask:<\/p>\n
\n\tWhere did the deal come from?
\n\tWho else saw it?
\n\tWhy did the borrower choose this manager?
\n\tWhat hard criteria would cause the manager to decline the deal?
\n\tHow often have covenants been breached?
\n\tWhen terms were breached, did the manager enforce, amend, restructure, or ignore the issue?
\n\tAre liquidity windows supported by the duration and cash-flow profile of the underlying assets?
<\/p>\n
\u00a0<\/p>\n
The central point is simple: discipline is easier to claim than to demonstrate. The evidence is in the decisions the manager made when saying no, enforcing terms, or protecting investor capital at the expense of short-term growth.<\/p>\n
The Market Has Grown Faster Than The Language Around It<\/p>\n
The IMF estimated private credit assets and undeployed commitments at approximately USD 2.1 trillion globally in 2023. Other market estimates are higher, with some commentary putting the market closer to USD 3 trillion or projecting growth toward USD 3.5 trillion later in the decade. The precise number depends on methodology, but the direction is clear: private credit is now large enough that generic claims are not enough.<\/p>\n
As the market grows, managers face pressure to deploy capital. The IMF warns that rapid growth, competition with banks, and pressure to deploy can weaken pricing, underwriting standards, and covenants. That is why allocators should test the words in the pitch book against actual investment decisions.<\/p>\n
“Proprietary” Should Mean More Than Access To A Deal<\/p>\n
Proprietary sourcing is one of the most overused claims in private credit. A transaction is not meaningfully proprietary simply because a manager was invited to review it. The relevant question is whether the manager has repeatable access that others do not, and whether that access produces better credit selection.<\/p>\n
For Kilde, the stated origination focus is non-bank financial institutions in Europe and Asia. These borrowers require market-specific underwriting, relationship access, and asset-level analysis that are not easily replicated through broad market channels. Allocators should not accept that claim at face value; they should ask for examples:<\/p>\n
\n\tWhich borrowers came through direct relationships rather than intermediaries?
\n\tWhich transactions were unavailable to larger generalist credit managers?
\n\tWhich transactions did Kilde decline after review?
\n\tWhat data did the team have that a competing lender did not?
<\/p>\n
\u00a0<\/p>\n
Declined Deals Reveal Underwriting Discipline<\/p>\n
Accepted deals show what a manager was willing to buy. Rejected deals show what a manager was willing to walk away from. The recommended question for allocators is: “What did you decline, and why?”<\/p>\n
A strong answer should include specific examples: a borrower rejected because non-performing loans were too high; a funding model that relied too heavily on short-term refinancing; collateral that could not be monitored with sufficient frequency; covenants that were not enforceable; or a deal that looked attractive on yield but failed downside analysis.<\/p>\n
A weak answer will stay generic. In a large and competitive market, any manager can find assets to buy. The harder skill is refusing assets that do not meet the mandate.<\/p>\n
Covenant Discipline Is Where Credit Protection Becomes Real<\/p>\n
Covenants are only valuable if they are monitored and enforced. A manager can negotiate tight documents and still fail investors if every breach is repeatedly amended without consequence.<\/p>\n
The practical diligence questions are:<\/p>\n
\n\tHow many covenant breaches occurred in the last three years?
\n\tWhat happened after each breach?
\n\tHow many breaches led to amendments, waivers, restructurings, additional collateral, pricing changes, or enforcement?
\n\tAre covenant amendments included transparently in investor reporting?
\n\tDoes the manager track “amend and pretend” risk?
<\/p>\n
\u00a0<\/p>\n
This matters because private credit loans are often illiquid and model-valued. If deterioration is handled by quiet amendments rather than transparent reporting, the apparent stability of the portfolio may be misleading.<\/p>\n
Track Records Need Attribution, Not Just Returns<\/p>\n
A headline return is not enough. Allocators should ask how the return was made.<\/p>\n
Relevant questions include:<\/p>\n
\n\tAre returns broadly distributed across the book or driven by a few outliers?
\n\tAre weaker positions, restructurings, or write-offs excluded from the marketed track record?
\n\tDid the current investment team generate the track record?
\n\tHas the strategy drifted from its stated mandate?
\n\tHow did the portfolio perform through periods of higher rates, refinancing pressure, or borrower stress?
<\/p>\n
\u00a0<\/p>\n
The IMF notes that private credit has not yet been tested through a severe downturn at its current size and scope. That makes track-record interpretation especially important.<\/p>\n
Liquidity Terms Must Match The Assets<\/p>\n
Recent US redemption pressure illustrates the problem. In 2026, several semi-liquid private credit vehicles received redemption requests above their periodic limits. Morgan Stanley’s North Haven Private Income Fund, BlackRock’s HPS Corporate Lending Fund, Ares Strategic Income Fund, and Blackstone’s BCRED all faced elevated withdrawal requests and applied or relied on redemption limits.<\/p>\n
The liquidity gates are in place for a reason, to protect the funds\u2019 assets against forced selling. The lesson is that investors must understand them before they invest. Investors may not receive full liquidity when they request it.<\/p>\n
At Kilde, our typical assets have a medium duration of up to 36 months and include early quarterly redemption clauses. Quarterly liquidity is credible only when the underlying assets are short-duration or self-liquidating, rather than typical five- to seven-year private loans.<\/p>\n
\u00a0<\/p>\n
Conclusion<\/p>\n
The private credit diligence process should be built around evidence, not adjectives. “Proprietary” should be tested through deal-source proof. “Disciplined” should be tested through declined deals. “Protected” should be tested through covenant behaviour. “Liquid” should be tested against the underlying asset duration.<\/p>\n
One central question remains strong: what did you decline, and why?<\/p>\n
A manager who can answer that question with specific examples is showing underwriting discipline. A manager who cannot answer it is asking investors to rely on presentation language. In private credit, that is not enough.<\/p>\n
**<\/p>\n
Sources<\/p>\n
\n\tIMF, Global Financial Stability Report, April 2024, Chapter 2, “The Rise and Risks of Private Credit”: https:\/\/www.imf.org\/-\/media\/files\/publications\/gfsr\/2024\/april\/english\/ch2.pdf
\n\tIMF, Global Financial Stability Report landing page, April 2024: https:\/\/www.imf.org\/en\/publications\/gfsr\/issues\/2024\/04\/16\/global-financial-stability-report-april-2024
\n\tMarketWatch, “Private credit not only won’t spark a financial crisis – it may be more stable than your bank”: https:\/\/www.marketwatch.com\/story\/private-credit-is-actually-built-to-survive-the-ghosts-of-the-great-financial-crisis-6eaa35d6
\n\tFinancial Times, “Private credit won’t spark the next financial crisis”: https:\/\/www.ft.com\/content\/5e8c7a7e-d9be-43ce-be0d-cc92c4304fb1
\n\tWSJ, “Morgan Stanley Caps Private Credit Fund Redemptions; Stock Falls”: https:\/\/www.wsj.com\/livecoverage\/stock-market-today-dow-sp-500-nasdaq-03-12-2026\/card\/morgan-stanley-private-credit-fund-hit-with-redemption-requests-IS8PSZh497HC5aF4CkGN
\n\tBarron’s, “BlackRock Stock Tumbles as Flagship Private Credit Firm Limits Redemptions”: https:\/\/www.barrons.com\/articles\/blackrock-stock-private-credit-redemptions-34e6c94d
\n\tWSJ, “BlackRock Private-Credit Fund Faces 13% Redemption Requests”: https:\/\/www.wsj.com\/finance\/investing\/blackrock-private-credit-fund-faces-13-redemption-requests-5cba8e89
\n\tFT, “Ares Management’s flagship private credit fund hit by 14% withdrawal requests”: https:\/\/www.ft.com\/content\/c7f1d22f-7ed9-4d7c-bb83-68423ea5fbf2
\n\tBarron’s, “Ares Caps Private-Credit Fund Redemptions Again as 14% Seek Exits”: https:\/\/www.barrons.com\/articles\/ares-private-credit-fund-redemptions-investors-exit-38b1e87b
\n\tMarketWatch, “Blackstone says withdrawal limits are a ‘feature and not a flaw'”: https:\/\/www.marketwatch.com\/story\/blackstone-says-withdrawal-limits-are-a-feature-and-not-a-flaw-designed-to-protect-investors-from-themselves-ec6f0e39
\n\tWSJ, “Secondary Buyers Eye Private-Credit Assets as Redemptions Mount”: https:\/\/www.wsj.com\/articles\/secondary-buyers-eye-private-credit-assets-as-redemptions-mount-73566238
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