For much of modern investing history, traditional bonds were regarded as the reliable foundation of a portfolio. They balanced equity exposure, provided predictable income, and offered a cushion in times of market stress. Government and investment-grade corporate bonds, in particular, carried an almost unquestioned reputation as safe assets.
That reputation has shifted. Inflation, rising rates, and sovereign debt pressures have altered the risk profile of bonds. Yields often fail to compensate for volatility, and correlations with equities have increased. What was once ballast no longer provides the same level of protection.
Against this backdrop, sophisticated investors are increasingly examining private credit vs bonds. Within private credit, structured opportunities particularly litigation-backed and commodity-backed notes provide alternative ways to pursue yield, control risk, and preserve capital.
Why bonds are not the safe option they once were
To understand the shift, it is useful to revisit what bonds historically offered:
- Income: Fixed coupon payments, usually reliable.
- Capital stability: Government and high-grade corporate issuers were widely trusted.
- Diversification: Bonds often rose when equities fell.
- Liquidity: Secondary markets provided flexibility.
These features made bonds the default allocation for capital preservation.
However, in today’s environment:
- Interest rate sensitivity has increased. Duration risk is punishing when rates rise, bond values can fall sharply.
- Equity correlation has risen. Recent market cycles show bonds and equities moving in tandem, weakening diversification benefits.
- Sovereign debt burdens are heavier. Credit downgrades and sustainability questions are no longer rare events.
- Real yields remain muted. After inflation, many bonds deliver little to no positive return.
Bonds still have a role, but they no longer provide the unquestioned protection investors once relied on.
How private credit compares
Private credit refers to non-public loans and structures where investors exchange liquidity for control. Terms are negotiated directly, allowing protective features that are not available in public bonds. At WIUS Capital, the focus is on litigation-backed and commodity-backed structures both designed with capital protection at their core.
The key to comparing private credit vs bonds lies in examining yield, risk, liquidity, and structural protection.
Yield comparison
- Bonds: Government and investment-grade issues generally provide modest yields, with higher returns only available through increased credit risk.
- Litigation-backed notes: Structured to deliver higher potential returns, uncorrelated to traditional markets.
- Commodity-backed notes: Provide a middle ground, offering yields supported by tangible collateral.
Private credit instruments therefore offer opportunities to enhance yield relative to bonds, while embedding structural protections not present in public markets.
Risk comparison
- Bonds:
- Exposed to duration and interest rate shifts.
- Dependent on sovereign or corporate credit quality.
- Vulnerable to inflation erosion.
- Litigation-backed notes:
- Carry case outcome and enforcement risk.
- Risks are mitigated through independent legal review, portfolio diversification, escrow deployment, and where appropriate, risk-transfer solutions.
- Commodity-backed notes:
- Exposed to price fluctuations and counterparty performance.
- Risks are mitigated by conservative loan-to-value discipline, security over assets, and enforceable contract structures.
Private credit differs from bonds in that risks are controlled at the structural level, rather than being reliant solely on the issuer’s general credit.
Liquidity comparison
- Bonds: Highly liquid in public markets but subject to mark-to-market volatility, especially in stressed conditions.
- Litigation-backed notes: Illiquid until case resolution or scheduled distributions, typically over one to three years.
- Commodity-backed notes: Liquidity depends on contract cycles, with limited secondary trading.
Private credit delivers protection and yield in exchange for reduced liquidity, which many institutional allocators accept as part of the illiquidity premium.
Litigation-backed notes explained
Litigation-backed notes are structured instruments where investor returns are linked to the outcomes of legal claims. Their strength lies in rigorous structuring and diversification.
Key characteristics:
- Diversification: Exposure across multiple cases and jurisdictions reduces binary outcomes.
- Independent legal review: External counsel assesses every case before deployment.
- Escrow deployment: Funds are released against defined case milestones.
- Risk transfer: In some structures, insurance or adverse cost cover may be layered in.
This combination provides investors with exposure uncorrelated to public markets, alongside embedded safeguards for capital.
See our Investors page for more on WIUS’s approach to litigation-backed opportunities.
Commodity-backed notes explained
Commodity-backed notes are tied to physical assets or receivables, offering yield supported by collateral.
Key characteristics:
- Security interests: Over stockpiles, receivables, or contract rights.
- Loan-to-value discipline: Conservative ratios ensure buffer against market volatility.
- Cash flow visibility: Repayments often linked to contracted sales or offtake agreements.
- Enforceability: Investors hold rights to seize or control collateral if necessary.
These features provide tangible protection, contrasting with the unsecured nature of most bonds.
Learn more about WIUS’s structuring approach on our Assets Classes page.
Private credit vs bonds: a comparative view
Feature | Bonds | Litigation-Backed Notes | Commodity-Backed Notes |
Yield | Generally modest | Higher potential, structure-dependent | Mid-range, asset-supported |
Risk | Duration, credit, inflation | Case outcomes, enforcement | Commodity volatility, counterparty |
Protection | Based on issuer credit | Diversification, escrow, legal review, insurance options | Security over assets, conservative LTV |
Liquidity | High | Low (linked to case lifecycle) | Medium (contract-driven) |
Correlation | Increasingly tied to equities | Low | Low–moderate |
Why sophisticated investors are diversifying
Professional allocators are not abandoning bonds entirely, but they are reducing reliance on them as the sole protective allocation. Diversification into private credit offers:
- Uncorrelated returns: Performance not tied to equity or interest rate cycles.
- Capital protection: Safeguards embedded through structuring and collateral.
- Enhanced yield: Premiums for complexity and illiquidity.
- Selective access: Opportunities unavailable in public markets.
This reflects a wider portfolio rebalancing in response to the limitations of the traditional 60/40 model.
Why WIUS Capital is different
Access to private credit varies. Many offerings are opaque or structured without discipline. WIUS Capital focuses exclusively on opportunities that meet institutional standards.
Our difference:
- Rigour: Multi-layered due diligence on every opportunity.
- Selectivity: Only a small fraction of sourced deals pass.
- Capital focus: Protection is prioritised over yield.
- Transparency: Structured documentation and investor reporting.
- Global reach: Access across multiple jurisdictions.
WIUS provides investors with confidence that every structure has been tested, reviewed, and designed to protect capital first.
Next step for investors
The debate of private credit vs bonds is not about replacement. It is about recognising that bonds no longer serve as the unquestioned safe allocation they once were, and that private credit provides an additional form of protection.
For institutional allocators, family offices, and advisers, the right next step is to understand how these structures can complement existing fixed income exposure.
Want to see if you qualify for our smarter investment opportunities?
You can also book a Private Consultation with WIUS Capital to explore litigation-backed and commodity-backed opportunities.
Disclaimer
This content is for general information only and does not constitute investment advice or a recommendation. All investments involve risk, and your capital is at risk. Opportunities discussed are intended for professional, high net worth, sophisticated and institutional investors only. Private market investments can be illiquid and complex, and you could lose all invested capital.
Written by Mark Boyes
Co-Founder, WIUS Capital
With over 15 years of experience in international financial services, Mark has managed and advised on assets exceeding $100 million across five continents. He has held directorships at two leading international financial advisory firms and built a strong reputation for delivering results in competitive markets. At WIUS Capital, Mark focuses on structuring litigation-backed and asset-secured private credit opportunities for professional investors worldwide, alongside advising private companies on capital raising and sustainable growth. Known for his transparency and strategic mindset, he is committed to helping investors and businesses secure long-term results.
Meet the Founders https://wiuscapital.com/meet-the-founders/
