Introduction

In today’s market, the hunt for yield is colliding with an increasingly selective credit environment. Base rates have steadied, but liquidity remains tight. Traditional fixed income products look anaemic against inflation, while private equity continues to demand long lock-ups and carry fees.

Professional investors — from family offices and private banks to institutions — are searching for alternative ways to put capital to work. Increasingly, their attention is turning to a structure that combines transparency, yield, and flexibility: the Credit Linked Note (CLN).

But CLNs aren’t just attractive to investors. They are quietly transforming the financing landscape for growth-stage businesses, giving founders access to non-dilutive capital that was once the preserve of banks and large institutions

Why Professional Investors Are Turning to CLNs

1. Predictable Yield in a Volatile Market

At their core, CLNs are structured debt securities linked to the credit performance of an underlying asset or portfolio. For investors, this typically means a fixed return of 8–12% per annum — with regular coupon payments and capital returned at maturity, provided no credit event occurs.

In a world where listed bonds often pay less than inflation and equities carry increasing volatility, CLNs stand out as a way to lock in contractual income without the uncertainty of market swings.

2. Asset-Backed Security

Unlike equity funds or blind-pool vehicles, CLNs are anchored to real underlying assets. These might be consumer loan portfolios, trade finance receivables, real estate debt, or contractual revenues. Investors know what they are exposed to — and governance frameworks ensure that assets are monitored and reported transparently.

For allocators, this makes CLNs a comfortable step into private credit: the downside is defined, the collateral is visible, and the income stream is contractual.

3. Flexibility vs Traditional Funds

Professional investors have grown wary of structures that lock up capital for years without a clear illiquidity trade off, with opaque deployment schedules. CLNs cut through this. They can be:

  • Targeted — linked to a specific loan pool, portfolio, or business.
  • Tradable — structured to be booked and transferred via international clearing systems.
  • Tailored — structured to match maturity preferences and risk appetite.

This flexibility allows investors to dial exposure to niche credit strategies without committing to a large blind fund.

4. Accessibility Through Familiar Channels

Historically, CLNs were the preserve of banks and large institutions managing credit exposure. Today, through arrangers such as Kingsbury & Partners, they are available to professional investors via familiar platforms: private banks, brokers, family offices, and investment platforms.

For investors, it means structured credit without friction — allocations can sit alongside traditional holdings, settled through existing custodians, and booked into existing portfolios.

Case Study: Alt Lending and the US Student Loan Market

The growing popularity of CLNs is best illustrated through real examples. Kingsbury & Partners recently partnered with Alt Lending, a US specialist in private student loans, to bring a Credit Linked Note to market.

Here’s how the model works:

  1. Acquisition – Alt Lending acquires distressed or delinquent private student loans at a discount.
  2. Restructuring – Borrowers are refinanced into 10-year terms at affordable rates, often supported by co-signers.
  3. Seasoning – After 12 months of consistent repayments, the loans form a performing, diversified pool of cash-flowing assets.
  4. Securitisation – Kingsbury & Partners packages this loan pool into a CLN, distributed to professional investors through Euroclear and Clearstream.

The result: investors access a 13% annual yield backed by seasoned, performing student loans, while Alt Lending raises scalable, non-dilutive growth capital to expand its loan book.

This is the bridge CLNs build — between investor appetite for yield and business demand for growth capital.

What This Means for Growing Businesses

From the outside, CLNs may appear purely as an investor product. In reality, they are a powerful corporate finance tool for businesses with predictable, cash-generating assets.

Non-Dilutive Capital

Founders are increasingly reluctant to give away equity at depressed valuations. CLNs allow businesses to raise funding without diluting ownership, protecting long-term control.

Cheaper Than Venture Debt

Venture debt has become a blunt instrument: high coupons, equity kickers, and strict covenants. CLNs, by contrast, can often be structured at a lower cost of funding, aligned to the asset cash flows rather than punitive venture terms.

Tailored to Cash Flow

Because CLNs are bespoke, they can be structured to mirror repayment profiles — whether receivables collections, loan repayments, or subscription revenues. This makes them far more adaptable than one-size-fits-all lending products.

Global Investor Access

Issuing a CLN through Luxembourg or similar jurisdictions enables businesses to tap into a global investor base. Through platforms like Euroclear and Clearstream, the note can be purchased by professional investors worldwide, far beyond the reach of traditional bilateral lending.

For businesses in sectors like lending, trade finance, renewable energy, or contractual revenue models, CLNs can unlock a new path to scale without the compromises of equity or bank debt.

The Kingsbury Difference

At Kingsbury & Partners, we don’t run a fund, and we don’t manage client assets. Instead, we act as a private capital market maker — structuring, issuing, and distributing CLNs that work for both sides:

  • Investors gain exposure to non-traditional credit opportunities with clear governance and attractive yield.
  • Businesses raise smart, scalable, non-dilutive capital to expand their operations.

Our Product & Risk Committee sits at the centre of every deal, scrutinising the assets, cash flows, and governance frameworks. This ensures CLNs are structured not just for investor yield but for real-world sustainability.

We see our role as bridging institutional capital with credit-originating businesses, using CLNs to create win-win structures that fuel both portfolios and growth.

Conclusion

Credit Linked Notes are no longer a niche instrument buried in bank balance sheets. They are becoming a mainstream tool for professional investors seeking yield and for businesses seeking capital.

For investors, CLNs offer a rare combination: contractual returns, asset-backed exposure, and flexibility. For businesses, they provide a lifeline — growth capital without dilution or punitive debt.

As selective credit conditions persist, CLNs may prove to be the structure that reshapes private credit for the decade ahead.