🤓 Private Credit’s Glow-Up (and the “uh-oh” bits) 💳🚀
Ever wondered why private credit is suddenly everywhere… and why regulators are suddenly paying attention? 👀
This deep dive helped me connect the dots on where the market is heading (2024–2026) — and what smart investors/operators should watch next.
🚦 Where the sector is heading (2024–2026)
Private credit hit ~$3.5T AUM by end of 2024 and kept compounding momentum into 2026.
The why is simple (and kind of inevitable):
- Banks got tighter 🏦➡️🔒
- Deals still needed funding 🤝
- Private lenders offer speed, custom terms, and execution certainty ⚡
And here’s the eye-popper: private credit funded 87% of leveraged buyout value in H1 2024 (vs 61% in 2019). That’s not a trend… that’s a structural shift. 🧱
🏆 The “Big 4” shaping the battlefield
Market power is concentrating, with four giants controlling a huge share of credit assets:
- Apollo Global Management (insurance-powered, investment-grade tilt)
- Ares Management (massive direct lending + dry powder)
- Blackstone (retail distribution machine + mega-funds)
- Blue Owl Capital (fast-growing direct lending specialist)
Translation: more scale, more branding, more product innovation… and more competition for deals. 🥊
📊 A tiny visual: growth vs risk (the 2026 tension)
PRIVATE CREDIT NOW
Growth: ██████████ (strong)
Scrutiny: ████████░░ (rising)
Credit stress: ██████░░░░ (uneven)
⚠️ The part people gloss over: defaults aren’t “one number”
Default rates vary depending on how you measure them — and the real risk clusters in smaller borrowers.
Here’s the practical takeaway:
✅ Larger borrowers tend to default far less than smaller ones.
❗ Smaller EBITDA companies can be dramatically more fragile when conditions tighten.
So the edge isn’t “private credit is good/bad.”
It’s underwriting, structure, and manager discipline. 🎯
“excessive growth in dry powder and continued competition could compromise underwriting standards”
— Federal Reserve
🧰 A quick “do-this-next” checklist
If you’re looking at direct lending / private debt in 2026, consider:
- Manager concentration: are they chasing deals or picking deals?
- Borrower quality: EBITDA size, covenant strength, sponsor behavior
- Valuation & transparency: how often, how marked, and by whom
- Liquidity reality: can you hold through a cycle? (not vibes—terms)
- Sector exposure: avoid accidental “same-risk, different wrapper” portfolios