Podcast Summary: How I Invest with David Weisburd

Episode: E289: The Evolution of Private Credit and What Comes Next
Date: January 23, 2026
Guest: Rick, Global Head of Private Credit at Pantheon
Host: David Weisburd

Episode Overview

This episode dives into the evolution, current landscape, and future outlook of private credit secondaries through a conversation with Rick, head of Pantheon’s global private credit business. With over $12 billion raised and experience spanning thousands of loans and hundreds of GPs, Rick shares foundational principles, market innovations, risk considerations, and tactical perspectives that have defined Pantheon’s approach. The discussion also covers misunderstood risks, portfolio use cases, tax considerations, and operational lessons from building a world-class franchise in a rapidly growing asset class.

Key Discussion Points & Insights

1. Building Pantheon’s Private Credit Secondary Platform

• Foundational Approach:

  • Began with modest beginnings, focused on defining a clear value proposition for investors (00:25).
  • Established expertise by innovating around liquidity solutions in a nascent market, inspired by previous evolutions in private equity and infrastructure (02:11).
  • The process: value proposition → robust investment process → asset origination → rigorous portfolio management → scaling through team, technology and operations.

  “It really starts off with that, how do you figure out what's good for investors? What problem are you really solving?” — Rick (00:25)

2. Why Credit Secondaries Matter

• Growing Market Need:

  • Credit markets (now ~$1.7-1.8 trillion) are large and diverse, necessitating tools for reallocation and liquidity (02:11).
  • Credit secondaries fill the gap for tactical portfolio rebalancing, mirroring innovations in private equity and infrastructure.
  • The “big bang” for the segment: Pantheon’s 2018 European credit secondary fund was a catalyst for industry evolution.

  “Each of these private markets asset classes have varying degrees of liquidity and duration. We realized that private credit didn't have that.” — Rick (02:11)

3. Differentiating Credit Secondaries from PE Secondaries

• Value Drivers:

  • Unlike PE secondaries (which hinge on headline discounts), credit secondaries are about liquidity solutions, risk-adjusted return, asset marking, and repayment probabilities (03:58).
  • Potential upside: pull to par, call protection, even equity-like upside components; but risk is primarily around loan performance.

  “There’s a lot of different drivers of value in a credit secondaries book... The dynamics are much more complex, much more nuanced and that’s what makes it, I think, a pretty interesting place to spend time in.” — Rick (04:21)

4. Portfolio Construction & Diversification

• Vast Exposure:
  • Pantheon’s look-through: 5,000+ loans, 100+ GPs, spanning North America and Western Europe, and multiple strategies from senior secured lending to royalties/film finance (05:48).
  • Diversification via companies, vintages, sectors, sub-strategies, duration, and credit quality.
  • Outperformance through access, discounts, short duration, and superior credit quality (05:48).

5. Use Case: Role in an Investor's Portfolio

• Complementary Role:

  • Institutions use credit secondaries to complement private credit, seeking alpha and differentiated access in diversified, funded portfolios (09:05).
  • Insurance value proposition: capital efficiency and attractive rating profiles (IG).
  • Wealth/advisory channel: lower entry barriers, periodic liquidity — access for private wealth and high net worth individuals.

  “Many of these portfolios have a diversification and cash flow profile that allow them to be rated attractively on an IG basis. And so for them that’s incredibly attractive.” — Rick (09:05)

6. Sourcing Deals: LP vs. GP-led Portfolios

• Two Ways In:

  • LP interest transactions: set portfolios, direct liquidity to sellers; can’t change composition (11:09).
  • GP-led liquidity (continuation vehicles): more control, detailed diligence, customize structure, fees, leverage, and GP alignment. Downside risk can be better managed, potentially eliminating problem assets at source.

  "We’re seeing almost a very significant sea change on the GP side. We’ve executed over 45 of these types of transactions in our history." — Rick (11:09)

7. Guarding Against Adverse Selection

• Mitigating Risk:

  • Wide origination funnel (sourcing $50-55B in deals per year); deep network yields strong intelligence and deal selection (14:22).
  • Focus on performing credit; diligence uncovers hidden issues even in seemingly "healthy" assets (17:30).

  “Having those relationships, and just having a team of credit experts that have been doing this for a long time... that's a good recipe for being confident in being able to vet credit and make sure you're not stepping into someone else's problems.” — Rick (14:22)

8. Franchise Building Principles

• Scaling Insights:

  • Human capital is key: Assemble team with experience in direct credit, fund finance, M&A, secondaries (18:49).
  • Culture of creating solutions, collaboration with GPs (not just capital providers), and leveraging Pantheon’s reputation and innovation track record.
  • Value add comes from being a trusted partner and adviser beyond just providing funding.

  “Your capital is a commodity, but who you are as an individual, and your relationship... that’s important to be value added to them. Those are all the, I think, the most important elements of, of how you build something from the ground up.” — Rick (18:49)

9. Value-Add for GPs

• Why GPs Value Pantheon:

  • Seen as “GPs themselves”, with aligned, real-world experience (22:43).
  • Offer expertise, candid advice, solutions, and can help GPs address challenges beyond the current transaction.

  “GPs are really looking to us as a trusted sounding board. They're looking at us for candid advice that they probably can't get from other allocators in the market.” — Rick (22:43)

10. Underappreciated Risks and Misconceptions in Private Credit

• Misunderstood Risks:

  • Valuation timing and accuracy in private markets (24:04).
  • Correlation risk: AB lending/non-correlation is often overstated, especially given recent fraud concerns.
  • Alignment risk: Changing GP/manager incentives and market consolidation.

• Skeptics’ Blind Spots:

  • Real risk to credit is predicated on equity impairment first — credit is not first-loss (25:54).
  • Risk-adjusted return has far more nuance than just stated return targets: structure, leverage, and duration matter (25:54).

  "If you’re worried about credit impairments, you have to think about equity impairments first.” — Rick (25:54)

11. Private Wealth Channel & Evergreen Funds – Surprises and Challenges

• Learnings from Building for Private Wealth:
  • Strong investor demand for diversified, low-risk access (27:51).
  • Operationally complex to manage daily-marked, quarterly-liquidity funds.
  • Ongoing need for education on suitability, trade-offs, and product design between evergreen and closed-end vehicles.

12. Tax Efficiency and Capital Gains Breakdown

• Tax Complexity:

  • Credit secondaries often yield both ordinary income (~2/3) and capital gains (~1/3); mix varies by deal and risk profile (32:02).
  • Future innovation likely in how private credit exposure is structured for greater tax efficiency (29:53).

  “The next innovation is really figuring out how to wrap a tax efficient blanket over that whole thing to shelter even more what's going on on the ordinary income side.” — Rick (31:23)

13. Looking Forward: Market Outlook and Opportunities

• Room to Grow:
  • Market adoption and education is just beginning (33:01).
  • Deal volume in credit secondaries is expected to triple over the next 4-5 years.
  • Transaction sizes and types continue to grow as institutions and wealth managers seek scaled solutions.

14. Timeless Career Advice

• Key Lesson from 30 Years in Finance:

  • Relationships matter most; pick smart partners, nurture mentoring, and learn from every mistake (34:26).
  • Long-term success is more about who you work with than just technical proficiency.

  “Think about relationships and picking your partners carefully... those are probably the things I'd tell my, myself from, from 30 years ago to, to think about more broadly.” — Rick (34:26)

15. Portfolio Fit for Private Credit Secondaries

• Where Does It Belong?
  • Used as a complement to direct lending, sometimes replacing or reducing direct credit manager count.
  • Acts as a tactical holding bucket (especially in evergreen format), allowing for capital deployment while seeking alpha managers.
  • Underexploited supply-demand dynamics offer continued upside and access benefits compared to crowded traditional and alternative allocations (37:15).

Notable Quotes & Memorable Moments

• "For a lot of things to negatively impact private credit, a lot of other things have to go wrong in other asset classes... being first dollar at risk in many businesses fundamentally means you are not in a first loss position." — Rick (25:54)
• “You’ve got to be introspective, you’ve got to be always learning... That’s the other thing I love about this business is we get to touch the biggest successes and brightest minds in investing in private credit at all of these great firms.” — Rick (35:48)
• "Access is also an important consideration. And for the high net worth crowd...we've seen people use credit secondaries as a transitionary asset class to hold cash from selling a large position in the equity markets." — Rick (37:15)

Timestamps for Important Segments

| Timestamp | Segment Topic & Highlight | |------------|---------------------------------------------------------------------------------| | 00:25 | First principles and building a private credit business | | 02:11 | Why the market needs credit secondary funds | | 04:21 | Key value drivers that separate credit from PE secondaries | | 05:48 | Portfolio composition and global diversification | | 09:05 | Use cases for different types of investors | | 11:09 | LP vs GP-led transactions and risk/return dynamics | | 14:22 | Adverse selection and risk mitigation strategies | | 18:49 | Building a franchise and creating a culture/value add | | 22:43 | Relationship with GPs and how Pantheon adds value | | 24:04 | Misunderstood risks and skepticism in private credit | | 27:51 | Building evergreen funds for private wealth and unexpected learnings | | 29:53 | Tax efficiency and outlook for innovation in private credit vehicles | | 32:02 | Capital gains vs. income composition in credit secondaries | | 33:01 | Five-year outlook for the platform and the segment | | 34:26 | Timeless career advice for young professionals | | 37:15 | Where credit secondaries fit in institutional and wealth portfolios | | 40:09 | Functionality and discipline in evergreen fund allocations |

Conclusion

Through detailed commentary, Rick provides a rare look into the growth of private credit secondaries—how they’re structured, where value is found, the evolving risks, and why this rapidly growing asset class still has room to run. The episode offers valuable insights on both the technical and interpersonal foundations needed to build a successful business in institutional investing.