Private credit has moved from the margins to the mainstream of European finance, and Luxembourg has become the domicile of choice for the managers raising and deploying it. As bank lending has retrenched and institutional investors have pursued the credit risk premium, European private credit assets under management have grown rapidly, and a growing share of new direct lending, mezzanine and credit opportunities vehicles is now structured through Luxembourg. This article is not about the asset class: you already know what private credit is. It is about the structuring decisions that determine whether a Luxembourg private credit fund is built for success. AIFMD II has reshaped the rules for loan-originating funds, and the choices you make on vehicle, leverage, diversification and liquidity before launch will shape both how quickly you reach the market and how smoothly the fund runs once it is there. Luxembourg's dominance in private credit is not an accident of marketing. It rests on a stable regulatory environment overseen by the CSSF, an extensive network of double tax treaties, deep service-provider expertise in credit strategies, and a level of investor familiarity that shortens the diligence conversation. For managers, that combination means fewer surprises and a structuring toolkit that allocators already understand and trust. The practical result is volume. The RAIF, the SIF, and the SCSp are all used at scale for credit strategies, often combined within a single structure. This acceleration has been driven by bank retrenchment and by sustained institutional appetite for the credit risk premium, and the momentum behind Luxembourg fund structuring under AIFMD II shows little sign of slowing. Vehicle selection is not a formality. The RAIF, the SIF and the SCSp each serve distinct purposes, and the right choice turns on your manager profile, your investor base and the strategy you are running. The central trade-off between the RAIF and the SIF is speed against regulatory status. The RAIF is not subject to direct product supervision by the CSSF, relying instead on a fully authorised AIFM, which makes it considerably faster to bring to market. The SIF is itself regulated by the CSSF, and direct product oversight can be decisive when particular investors, mandates, or strategies require a product-regulated wrapper. For most managers prioritising time-to-market, the RAIF is the natural default; the SIF earns its place where the investor base values direct regulatory status. The SCSp, the Luxembourg special limited partnership, has become the preferred structural form for many credit managers. Its contractual flexibility and tax transparency make it especially familiar to US and UK LP investor bases accustomed to limited partnership structures, and it can serve as the fund vehicle itself with RAIF or SIF regulatory overlay. In practice, the comparison comes down to three points: RAIF: fastest route to market and not directly product-regulated but requires an authorised AIFM; well-suited to managers prioritising speed. SIF: directly regulated by the CSSF and slower to launch, but advantageous where investors or strategies value product-level supervision. SCSp: a tax-transparent partnership offering maximum contractual flexibility, and the form most familiar to US and UK LPs. If you are structuring a loan-originating fund, AIFMD II is now the starting point rather than an afterthought. The loan-originating fund (LOF) regime is triggered when a fund originates loans and introduces a set of hard constraints that must be built in from the outset rather than retrofitted once terms are agreed. The headline constraints fall on leverage and concentration. Open-ended LOFs are capped at 175 per cent leverage and closed-ended LOFs at 300 per cent. LOFs must also meet diversification requirements, with exposure to any single borrower generally limited to 20 per cent of the fund's capital, and originators are subject to risk retention rule...
