In our recent Wall Street Journal Op-Ed, “How ‘Shadow Banking’ Enables Safer Banking,” we explored how private credit functions as a structural complement to traditional banking. By shifting credit risk away from deposit-funded balance sheets and toward loss-absorbing institutional capital, private credit can make the financial system more resilient without weakening bank regulation.
But not all private credit is the same. Much of the asset class matured during the era of economic optimization—helping private equity sponsors maximize efficiency, consolidate cash flows, and employ leverage. That model served its purpose in a world defined by globalization and financial engineering. The current environment, however, increasingly demands resilience.
In this follow-on essay, “From Optimization to Resilience,” we connect the system-level argument in the Op-Ed to a specific segment of the private credit market: debt-led, non-sponsor lending. As global supply chains are reshored and investment shifts toward physical infrastructure and operating businesses, capital must be deployed to underwrite durable cash flows rather than financial transactions.
Our approach at Kennedy Lewis focuses on providing senior capital directly to operating businesses that are building localized productive capacity—from industrial assets to essential services. By emphasizing fundamental credit underwriting, conservative structures, and long-term alignment, we believe non-sponsor private credit is well suited to a world that prioritizes stability over efficiency alone.