What is the role that Metrics private debt plays in an investor portfolio?

Private debt serves multiple roles in an investor’s portfolio. On the lower-risk end, it offers a defensive allocation, similar to traditional fixed-income alternatives. On the higher-risk end, it can act as an equity market replacement through high-yield senior debt, mezzanine debt, or structures where managers take equity warrants or positions. This shift from public equities to private credit provides the potential for higher yields and upside participation.

What are the key strategies that differentiate Metrics?

Metrics assesses each transaction based on its merits, identifying the most suitable part of the capital structure for financing. In most cases, this means providing senior secured debt, which constitutes the majority of our funds. However, we also offer mezzanine or subordinated debt and may take equity positions in certain transactions. Our ability to operate across the full capital structure, from debt to equity, is a unique aspect of our product offering.

Metrics focuses on transactions involving companies with strong cash flows and reliable debt repayment sources. As a result, we typically avoid sectors with volatile earnings, such as natural resources and agriculture, where fluctuating cash flows could impact a company’s ability to service and repay its debt.

What is Metrics’ outlook for private lending in 2025 and where do they see the greatest opportunities?

Metrics is not a macro-driven firm; our approach is fundamentally bottom-up, focusing on the financial health of each company we lend to. Market commentary is often backward-looking, but many past disruptions such as rising construction costs in 2021 and supply chain challenges have already played out. Businesses have adjusted to shifts in demand, supply, and cost inflation.

Our focus is on current market conditions with a forward-looking perspective. Despite significant interest rate increases, the demand for corporate credit remains strong, supported by solid fundamental drivers that justify continued lending in key sectors.

This transcript has been edited for written clarity.