In today’s competitive and capital-intensive markets, companies must continuously evaluate the best strategies to secure financing for growth, expansion, and restructuring. While traditional bank loans and public bond issues remain common, Private Debt Placements (PPs) have increasingly become a preferred alternative for corporations seeking flexibility, confidentiality, and access to a wider pool of capital providers.

This article explores when a private placement of debt is appropriate, why it has gained momentum globally, and the strategic considerations companies should weigh before pursuing this financing solution.

What Is a Private Debt Placement?

A Private Debt Placement is a form of long-term financing in which a company raises capital by issuing debt securities directly to a small group of qualified institutional investors, rather than through a public bond offering or syndicated loan.

Unlike bank financing, PPs typically involve non-bank institutional investors such as insurance companies, pension funds, private credit funds, and family offices. The terms are negotiated directly, allowing for tailored structures that adapt to the company’s specific cash flow profile, industry risk, and strategic objectives.

Why Consider a Private Placement?

Companies may consider a private placement when:

• Diversifying funding sources: Reducing reliance on traditional banks.
• Securing long-term capital: PPs often extend beyond typical bank loan maturities, providing financing for 7–15 years.
• Maintaining confidentiality: PPs are not subject to the same disclosure requirements as public debt offerings.
• Flexibility in structuring: Terms such as amortization, covenants, and interest rates can be negotiated bilaterally.
• Access to international capital: Cross-border investors actively participate in PPs, especially in emerging markets like Latin America.

Global Market Trends

The global market for private placements has experienced strong growth over the past decade. According to Preqin and PitchBook, private credit has surpassed USD 1.7 trillion in assets under management globally in 2024, positioning itself as one of the fastest-growing asset classes.

In Latin America, the rise of private debt placements reflects both the limited depth of local bond markets and the increasing appetite of global investors to diversify into high-yielding corporate debt from the region. Sectors such as infrastructure, energy, agribusiness, and retail have been among the most active in pursuing this type of financing.

Key Advantages of Private Debt Placements

1. Long-Term Maturity: Financing tenors significantly longer than local bank loans.
2. Confidentiality: Transactions are private, with reduced disclosure requirements.
3. Flexible Structuring: Customizable repayment schedules, covenants, and interest rate structures.
4. Access to Global Investors: Diversifies funding sources beyond local financial institutions.
5. Strategic Control: Maintains shareholder independence without resorting to equity dilution.

Risks and Considerations

While private placements offer significant advantages, they also come with challenges:

• Higher transaction costs compared to bank loans, given the need for legal, financial, and rating agency involvement.
• Investor due diligence requirements, which can be extensive and time-consuming.
• Covenant restrictions that may limit operational flexibility if not carefully negotiated.
• Currency risk, in the case of cross-border placements denominated in USD or EUR.

For these reasons, engaging with experienced financial advisors is essential to ensure that terms align with the company’s long-term strategy.

Private Debt Placements are no longer a niche option; they have become a mainstream strategic financing tool for corporations across industries. For companies in Latin America, they represent a unique opportunity to access flexible, long-term, and confidential financing, while tapping into the appetite of global institutional investors.

At SAJOR Consulting, we combine deep expertise in corporate finance, debt structuring, and cross-border advisory to support companies in evaluating, structuring, and executing private debt placements that maximize value and strategic impact.

Contact us today to discuss how a Private Debt Placement could strengthen your company’s financial structure and unlock new growth opportunities.