Good morning. We hope our fellow American eclipse-watchers emerged with spirits high and without fried corneas. Much debated at the Financial Times’ New York office yesterday: was the eclipse an economic boost or a drag? Boosters argued the caravans of eclipse tourists flooding into towns along the path of totality would lift spending. Draggers replied that the crowds of office workers ambling outside in the eerie half-light would hurt productivity. What say you? Email us: robert.armstrong@ft.com and ethan.wu@ft.com. 

Private credit alpha

Unhedged went through a period last summer during which we obsessed over what expected returns for private credit might be, and where those returns come from. “The promise of private credit is that for a loan to a borrower of a given creditworthiness, it can get returns that are either a bit better than, or less volatile than, or at the very least uncorrelated to, other forms of lending such as high-yield bonds,” we wrote. This possibility might derive from, variously, the fact that some borrowers will pay up to avoid public bond and loan markets; tighter contract terms; tighter bilateral relationships between borrower and lender; or lack of mark to market valuation. The hard question, though, is whether “risk-adjusted performance is greater or less than the fees [the] clever, hard-working people” who run private credit funds charge their investors.

Three scholars from Ohio State University argue in a new paper that the excess returns from private credit are about equal to the fees that the managers charge. Fund investors, that is to say, receive no excess returns. The returns investors do receive might be high, but only high enough to compensate them for the high risks they have taken.