Outlooks 2026: Private Credit

Executive Summary

Private Credit Outlook 2026 – Growth to accelerate, along with complexity and liquidity risks

Private credit's momentum will continue as global capital demand rises and asset-backed finance (ABF) becomes a core part of funding this growth. Financial innovation is playing a critical role in supporting increasingly diverse liquidity needs.

Key takeaways:

• Momentum will continue, but mix is shifting. We see assets under management (AUM) exceeding $2 trillion in 2026 and approaching $4 trillion by 2030. Investing is shifting from a corporate lending focus to the ABF market, while EMEA and APAC will gain momentum. Mergers & acquisition (M&A) and leveraged buyout (LBO) activity will escalate, increasing competitive pressures among lenders but also opening more funding opportunities.
• ABF will lead growth as partnerships, asset origination accelerates. Alternative asset managers are looking to fund newer, more diverse pools of assets – increasingly consumer loans and data infrastructure credit. New partnerships are spurring origination opportunities while alternative asset managers will continue stepping up as banks remain constrained in certain lending activities.
• A widening range of assets will support securitization growth. Private credit's growing presence across securitized products is particularly focused in sectors where high yields help compensate for the riskiness of the assets, especially as spreads have compressed across asset types.
• Innovation will support growing liquidity demand. Private credit is leaning more than ever on financial innovation tools such as structured credit, rated fund structures, NAV lending and PIK loans to address demand for alternative liquidity funding. Growing adoption of evergreen funds is also reshaping distribution channels for managers.
• Regulatory guardrails will remain limited, but transparency focus will grow. Globally, regulators generally continue to support private credit's larger role in addressing capital needs. But there is also caution. For example, the Bank of England recently launched a systemwide exploratory scenario for private markets.
• Risks will rise as interconnectivity grows. Private credit funds and traditional financial institutions are deepening ties, which could heighten contagion risk in a downturn. Volatility could grow as the Main Street retail investor assumes a bigger role in private credit.

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