23 February 2026
Private credit is no longer a niche — it’s becoming a central pillar of global finance.
In 2025, the asset class continued its rapid ascent, with global assets under management estimated at roughly $1.7 trillion, up from just $310 billion in 2010.[1],[2] That growth reflects broader investor adoption and deeper penetration into parts of finance once dominated by banks. The expansion has also involved more flexible capital solutions that increasingly blur the line between debt and equity.
Rising equity valuations are expected to reinforce that evolution. In 2025, the combined market value of listed equities worldwide had climbed to $148.9 trillion, almost 19% higher than a year earlier — a re-rating that should expand opportunities for shareholders to unlock liquidity through equity-backed credit structures.[3]
Private credit’s growing influence has been most visible where banks have retreated. Across Africa and Latin America, private credit investment reached record levels in 2025, with $18 billion deployed in emerging markets alone, as private lenders stepped in to fill gaps left by constrained balance sheets and tighter regulatory requirements.[4] Double-digit yields in certain regions highlight both the asset class’s appeal to investors and the acute scarcity of capital.
For large corporates and mid-market borrowers, private credit is more than an alternative funding source. It offers speed, certainty of execution and reduced disclosure requirements. Just as importantly, it enables highly customized financing structures that traditional banks and public markets may struggle to provide — including arrangements where equity or other non-traditional assets are pledged as collateral rather than physical assets.
To be sure, private credit has also drawn scrutiny this year. Rating agencies and market analysts have warned of rising default risks if growth slows and refinancing pressures build, particularly in highly leveraged transactions where borrower cashflows are less resilient.[5]
Much of that concern, however, overstates the risk. The bulk of the market remains concentrated in senior secured, asset-backed and sponsor-supported lending. In a system where banks can become overly cautious, private credit is expanding the range of financing options available to companies pursuing growth.
Mind the (credit) gap
A persistent force behind the rise of alternative credit is a financing gap — where smaller businesses struggle to secure bank funding on attractive terms, and fast-growing, capital-intensive sectors are expanding faster than risk-averse banks are willing to finance.
According to the IFC–World Bank MSME Finance Gap Report, formal small businesses across 119 emerging and developing economies face a financing shortfall of around $5.7 trillion, equivalent to 19% of GDP and 20% of total private-sector credit.[6] Roughly 40% of formal micro, small and medium enterprises remain credit-constrained, underscoring the scale of unmet demand.
That same dynamic is playing out at the other end of the spectrum. Capital-intensive sectors tied to digital infrastructure and artificial intelligence are growing at a pace that traditional bank balance sheets struggle to support.
Hyperscalers such as Meta, Amazon, Microsoft, Alphabet and Oracle are projected to increase capital expenditure by 64% year on year to more than $370 billion in 2025 and $500 billion in 2026.[7] Private credit has emerged as a key funding source for data-center buildouts, providing long-term capital aligned with the cashflow profiles of these assets while offering investors exposure to structural growth themes such as digitalization and AI.
Private credit’s ability to underwrite transactions on this scale — once the preserve of large banks — has been one of the year’s most significant developments. “Club deals” involving syndicates of private credit funds and select banks are increasingly replacing parts of the leveraged loan market.
More broadly, the shift of capital towards long-duration assets linked to secular trends such as digitalization and the energy transition is a net positive for the global economy. These investments are essential to sustaining growth, upgrading infrastructure and advancing climate adaptation — and private credit is playing a growing role in making them viable.
2026 outlook
Private credit assets under management are projected to surpass $2.3 trillion next year, supported by favorable macro conditions, regulatory shifts and enduring structural trends.[8] Funds also have ample firepower, with $224.5 billion raised in 2025, reflecting strong investor appetite.[9]
Investors are committing billions in fresh capital as they seek diversification and yield in an uncertain macroeconomic environment. Even family offices and institutional allocators linked to ultra-high-net-worth individuals are increasing exposure to private markets.[10] With inflation pressures lingering and correlations across public markets remaining elevated, the traditional 60/40 portfolio is said to be under strain — pushing asset managers to look to private credit for resilience.[11]
From the borrower’s perspective, private credit is increasingly viewed as a viable — and often superior — alternative to bank lending or syndicated loans, particularly for non-standard or time-sensitive transactions. Working with a smaller group of sophisticated lenders can also foster deeper, more constructive relationships. During periods of stress, including the pandemic, private credit providers have shown greater flexibility than banks in working through short-term disruptions.
Regulatory tailwinds could add further support. Market pricing suggests US interest-rate cuts are likely in the year ahead, easing debt-servicing costs, improving liquidity and encouraging a rebound in mergers and acquisitions — conditions in which private credit has historically thrived.[12]
Federal regulators in the US have also withdrawn post-crisis leveraged lending guidance, giving banks greater scope to re-engage in leveraged loans.[13] For the private credit ecosystem, this is positive as banks remain vital as funding, distribution and structuring partners, and a more active banking channel can help expand deal flow and financing capacity.
As 2026 begins, private credit — including equity-backed financing — is evolving into a powerful engine for growth and innovation. Its ability to deliver speed, flexibility and bespoke solutions means the asset class will continue to shape how capital flows in an increasingly complex world.
[1] https://iqeq.com/hk/insights/a-quick-guide-to-private-credit/
[2] https://www.lordabbett.com/en-us/financial-advisor/insights/investment-objectives/2025/a-closer-look-at-the-growth-of-private-credit-markets.html
[3] https://focus.world-exchanges.org/issue/october-2025/dashboard
[4] https://www.ft.com/content/0e1fbfa3-bf22-4e28-bbfd-c33fa9d264cb
[5] https://www.reuters.com/business/private-credit-pressures-fuel-further-defaults-2026-says-morningstar-dbrs-2025-12-16/
[6] https://www.worldbank.org/en/topic/smefinance
[7] https://privatebank.barclays.com/insights/outlook-2026-11-2025/the-psychology-of-market-bubbles/
[8] https://www.jpmorgan.com/insights/banking/global-dealmaking-trends-driving-growth
[9] https://www.spglobal.com/market-intelligence/en/news-insights/articles/2026/1/global-private-credit-fundraising-increased-in-2025-96448289
[10] https://www.businessinsider.com/wealthy-families-shift-billions-to-credit-real-estate-ditch-startups-2025-10
[11] https://www.bloomberg.com/news/articles/2025-11-19/private-credit-becomes-core-as-jpmorgan-rethinks-60-40-model
[12] https://privatebank.barclays.com/insights/outlook-2026-11-2025/private-markets-in-a-fragmentation-era/
[13] https://www.reuters.com/legal/transactional/us-regulators-relax-leveraged-lending-guidance-banks-2025-12-05/
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