Episode summary
PW Northern California 2026: Nicole Tanenbaum of Chequers Financial Management Spoke to Courtney
Summary
Nicole Tanenbaum said the biggest current risk in private credit is concentrated in direct lending, especially where vehicles can create liquidity mismatches between assets and liabilities. She argued that private credit is a long-term asset class and belongs in portfolios only when investors are comfortable with an illiquid structure that can earn the illiquidity premium.
She also warned that the market’s rapid growth, now over $3 trillion, was built during a mostly benign credit backdrop and has not been fully tested in a deep, prolonged recession. With rates higher and borrowing costs resetting, she said balance-sheet stress is rising, making manager underwriting, origination discipline, and workout capability the key things to underwrite.
On the opportunity side, Tanenbaum said her team is looking for areas of structural change and dislocation. She pointed to digital infrastructure, energy transition, opportunistic credit, asset-based lending, and specialty finance, including sectors such as aviation finance and litigation finance. On Bitcoin and crypto, she said the space is gaining institutional acceptance but is not yet in her firm’s strategic asset allocation because of volatility, even as blockchain and tokenization remain areas to watch.
Key takeaways
- Nicole Tanenbaum said the main private credit risk is in direct lending, especially where liquidity mismatches can catch wealth clients off guard.
- She said the private credit market is now over $3 trillion but still untested through a deep, prolonged recession at this scale.
- Tanenbaum said manager underwriting, origination diligence, and workout skill are the most important defenses as higher rates pressure borrowers.
- She sees opportunity in private infrastructure, especially digital infrastructure and energy transition, for durable cash flows and inflation protection.
- She prefers opportunistic credit, asset-based lending, and specialty finance over plain-vanilla direct lending in the current environment.
- She is not allocating to Bitcoin in strategic asset allocation yet because of volatility, but is watching blockchain and tokenization.
Notable quotes
“private credit is a huge space within the alternative universe, and I think it really does get bucketed into just direct lending”
“We're over $3 trillion today. A lot of that growth really came out of kind of post-Great Financial Crisis”
“it's been somewhat untested in a deep, prolonged recessionary situation at this scale”
“manager underwriting is first and foremost the most important aspect in our opinion”
“we have not implemented it as part of our strategic asset allocation at this point given the inherent volatility”
How the episode opens
Private credit's been around a while now. What's the current risk for wealth management portfolios? I'm here with Nicole Tanenbaum, Chief Investment Officer of Checkers Financial. Nicole, your take?
Hi Courtney, thanks for having me. So, private credit is a huge space within the alternative universe, and I think it really does get bucketed into just direct lending, and that's really where we've seen a larger source of stress across the marketplace today. And I think it's twofold, right?
I think number one, it's around the potential liquidity mismatches with some of the vehicles that are out there today, and how advisors and their clients are navigating through the idea of a potential liquidity mismatch between assets and liabilities, right? Private credit is a long-term asset class, right? And so we want to make sure that when we're structuring that in the portfolio, it really does have that illiquid place within the portfolio, so that we can get that true illiquidity premium from those returns.
Right? When it comes to the underlying risk within the fundamentals in private credit on the direct lending side, and what we've seen is this huge growth in the private credit market, right? We're over $3 trillion today.
A lot of that growth really came out of kind of post-Great Financial Crisis, right? When banks partially kind of retrenched and pulled back a bit. And so what we've seen is And that really happened in a pretty benign credit market, all of this growth, and it's been somewhat untested in a deep, prolonged recessionary situation at this scale.
So, I think right now in this environment, given that we've had a big rate reset in terms of interest rates, cost of capital, it's putting some stress on balance sheets. And so, manager underwriting is first and foremost the most important aspect in our opinion, um in terms of how diligent is your manager in understanding the credit risk that they're taking in the portfolio, what type of underwriting are they doing at origination, can they do workouts in the case when a credit doesn't go the way they plan.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- private credit risk
- recession stress testing
- private credit opportunity
- private wealth
- asset class volatility
Companies and tickers mentioned
- Chequers Financial Management
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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