A broad market of non-bank lending versus one specific subordinated layer — how the two relate and when each fits.
Private credit is the broad category of non-bank lending, spanning senior secured facilities through junior structures. Mezzanine debt is one specific layer within it — subordinated borrowing that sits between senior debt and equity, typically priced above senior debt. The comparison is scope versus position: a market of lenders versus a slot in the capital stack.
Private credit describes who is lending — specialist funds, family offices and private capital providers rather than banks — across structures from senior secured and unitranche to junior facilities. Mezzanine debt describes where a facility ranks: subordinated to senior lenders, ahead of equity, and often carrying payment-in-kind interest or equity-style features. Most mezzanine is provided by private-credit lenders, so the practical comparison for a borrower is between a senior private-credit facility and a mezzanine layer.
| Factor | Senior private credit | Mezzanine debt |
|---|---|---|
| Position | Top of the debt stack | Below senior debt, above equity |
| Security | First-ranking security package | Often second-lien or unsecured |
| Pricing | Typically priced above bank debt | Typically priced above senior debt |
| Return features | Cash interest | Cash plus PIK interest, sometimes warrants |
| Repayment | Amortising or bullet | Usually bullet at maturity |
| Covenants | Negotiated, lender-led | Looser than senior; inter-creditor constrained |
| Typical use | Acquisitions, refinancing, growth, bridges | Stretching leverage, development gap funding |
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Start with how much senior debt the assets and cash flows support, then decide whether the remaining gap is best filled with mezzanine, preferred equity or more equity. Compare blended cost, covenant load, inter-creditor terms and the exit or refinancing route across the whole capital stack, not each layer in isolation. Debt tickets across these structures typically run USD 10m–500m+, with terms negotiated transaction by transaction.
Usually, yes. Mezzanine facilities are most often provided by non-bank lenders, so they form part of the private-credit market. The distinction drawn in this comparison is between the broad category of non-bank lending and the specific subordinated layer that mezzanine occupies in the capital stack.
Pricing reflects risk and ranking rather than the label. Senior private credit is typically priced above bank debt, and mezzanine is typically priced above senior debt because it is subordinated and less secured. Exact terms are negotiated transaction by transaction.
Yes — many structures combine a senior private-credit facility with a mezzanine layer beneath it, governed by an inter-creditor agreement. The blend determines overall cost of capital, covenant load and how much equity the sponsor must contribute to the transaction.
Unitranche blends senior and junior risk into a single facility with one lender, one document set and blended pricing. It is a private-credit structure that can replace a separate senior-plus-mezzanine stack, simplifying inter-creditor arrangements at the cost of less granular pricing.
The contract that governs how senior and mezzanine lenders rank against each other — payment priority, security enforcement, standstill periods and what the junior lender may do on a default. It is central to any structure combining a senior facility with a mezzanine layer.
When senior capacity is exhausted but the sponsor wants to limit dilution, and the project or business can carry a junior layer with PIK or back-ended repayment. The test is blended cost across the whole capital stack against the equity that mezzanine displaces.
Speak to a partner about how this applies to your transaction. A partner responds personally, typically within one business day.
