An Update on Private Credit

Summary

• Global private credit grew from $0.2 trillion in 2007 to $1.8 trillion in 2025.
• Non-bank lenders provide loans directly to private companies, many of which are middle-market businesses owned by private equity sponsors.
• These loans are typically floating-rate, senior secured debt used to finance leveraged buyouts, growth capital, acquisitions, or refinancings.
• Private credit is held in private funds rather than publicly traded vehicles.
• Retail investors access private credit through structures such as interval funds, publicly traded business development corporations (BDCs), general partnerships, or non-traded BDCs.
• Isolated defaults have occurred, including Tricolor Holdings 2025 bankruptcy amid fraud allegations 2025 bankruptcy amid fraud allegations 2025 bankruptcy amid fraud allegations.
• The disruptive impact of artificial intelligence on the software industry has raised concerns regarding credit quality in that sector.
• Industry leaders note that private credit lacks transparency 2025 bankruptcy amid fraud allegations.
• JPMorgan's Jamie Dimon stated that private credit lacks rigorous valuation marks, increasing the likelihood of sales if the environment worsens.
• Media coverage has focused on defaults 2025 bankruptcy amid fraud allegations.
• Redemption requests from retail investors have increased due to market stress fueled by the Iran conflict 2025 bankruptcy amid fraud allegations.
• Some funds have implemented liquidity provisions or "gates" to manage withdrawal impacts.
• Deal flow remained active in 2025 2025 bankruptcy amid fraud allegations.
• No discernible trend toward widespread deterioration or systemic risk exists in the private credit market.
• Underlying fundamentals remain sound, particularly for funds managed by skilled firms.