Understand How Private Debt Placement Works

Works!

Long-Term Strategy

Contrary to conventional bank borrowing, private placements provide fixed-interest financing with longer maturities. The company will have more time to pay back the private loan placement while knowing the cost of financing will remain constant during the investment's life, which is ideal for growth opportunities where there won't be a quick return on investment.

Supplementary to Current Financing

Private placements also assist in a company's capital sources and capital structure being more diversified. Private placements can complement rather than compete with present bank financing since the terms can be customized, which enables a company to better manage its debt commitments. Diversification of funding sources is especially important during market cycles when bank liquidity may be limited.

Instead of requiring ratings, registrations, or a minimum size, private placements enable privately held, middle-market, and public firms to raise capital in a similar way to an underwritten public debt offering.

Private placements can offer public firms superior execution and structural flexibility for smaller issuance sizes than the public bond market.

Privacy and Control

Rapid Implementation

The growth and maturity of the private placement market have led to improved documentation standards, transparency in terms of terms and pricing, increased financing capacity, and an overall expansion of the market's breadth and depth. Because of this, the private placement market promotes an environment where an investment can be made fast, often in 6 to 8 weeks. Furthermore, as the issuer is not required to invest time and resources in creating a prospectus, completing a private placement is frequently faster than completing a public market corporate bond.