Private credit has had its moment in the spotlight. Over the past five years, the asset class has grown from a niche alternative into a mainstream allocation, attracting capital from institutions, family offices and sovereign wealth funds alike. The conversation has been loud, the enthusiasm genuine and in many corners of the market, the crowding has begun.

But not everywhere.

At Terralumin, our private credit strategy is deliberately concentrated in asset backed lending, specifically against property and infrastructure assets across G20 markets. It is a corner of the market that has not received the same attention as corporate direct lending, and that relative obscurity is precisely where the opportunity lies.

What asset backed private credit actually means

Asset backed private credit is lending secured against a tangible, identifiable asset. In our case, primarily commercial and residential property and infrastructure projects across major economies. The loan is not backed by a company's cash flow projections or a management team's track record. It is backed by something you can see, value and, if necessary, take possession of.

This distinction matters enormously in a higher rate, higher volatility environment. When corporate borrowers face margin compression or refinancing pressure, the collateral backing a corporate loan can deteriorate rapidly. When a property or infrastructure asset backs the loan, the collateral holds its value with far greater resilience across cycles.

Why traditional lenders have stepped back

The opportunity in asset backed private credit exists in large part because traditional lenders have retreated. Regulatory capital requirements have made certain categories of property and infrastructure lending unattractive for banks. Basel III and its successors have imposed significant capital charges on real estate and infrastructure exposure, making it economically rational for banks to reduce their participation.

That retreat has created a gap. Borrowers with strong assets and genuine financing needs are finding traditional credit channels constrained. They are willing to pay a premium for speed, certainty and flexibility. Private credit managers with the underwriting capability and capital to fill that gap are being compensated accordingly.

The yield premium is real and it is structural

Asset backed private credit in property and infrastructure currently offers yield premiums of between 200 and 400 basis points over comparable public market instruments, depending on geography, asset type and loan to value ratio. That premium is not simply compensation for illiquidity. It reflects the genuine scarcity of well capitalised, sophisticated lenders in this part of the market.

Importantly, this premium shows no signs of compressing rapidly. The structural withdrawal of bank capital from these lending categories is not a short term phenomenon. It is the product of regulatory changes that took years to implement and are unlikely to be reversed. The opportunity is durable.

Rigorous underwriting is non-negotiable

Asset backed private credit rewards discipline above all else. The asset provides protection but only if it has been properly valued, legally structured and monitored throughout the life of the loan. At Terralumin, every private credit position is underwritten against the asset first and the borrower second. We stress test valuations, assess liquidity of the underlying asset in adverse scenarios and maintain conservative loan to value ratios across the portfolio.

This is not a market for managers chasing yield. It is a market for managers who understand assets, credit cycles and the mechanics of secured lending. Those who do will be rewarded. Those who do not will find that the collateral they thought was protecting them was never quite what they believed.

The bottom line

Asset backed private credit sits at the intersection of yield, protection and structural opportunity. It is not the loudest part of the private credit conversation and that is exactly why we are there. The best opportunities in any market tend to be found where the crowd has not yet arrived. In asset backed lending against property and infrastructure across the G20, the crowd is still finding its way.

We are already positioned.