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Trends in the Private Credit Market
Demand for private credit (lending by non-bank investors) has grown rapidly since the global financial crisis to fill a lending void left by banks and meet investor demand for flexible financing. The asset class has grown year-on-year for the past decade and is expected to reach US$4.5 trillion by 2030.1 This has, in turn, catalysed a fast‑growing credit secondaries market, providing portfolio management tools in an otherwise illiquid asset class.
Private Credit Secondaries
What are Private Credit Secondaries?
Private credit secondaries allow investors to buy or sell interests in existing private credit funds. These transactions fall into two main categories: (i) Limited Partner ("LP") led transactions through which existing LPs adjust their exposure by selling fund interests to secondary buyers; and (ii) General Partner ("GP") led transactions which enable fund managers to extend ownership of a defined loan pool beyond the original term, most commonly through a continuation vehicle.
For new investors, private credit secondaries offer access to diversified portfolios of private loans at attractive entry points. For existing investors, they provide an additional lever to manage exposures and liquidity prior to maturity.
Drivers Behind Growth
The rise in popularity of credit secondaries has been anchored by growth in the primary private credit market, which has led to large volumes of outstanding private loans and demand for flexible liquidity. This was particularly evident following the decline in public market valuations in 2022 and 2023 which left many institutions over-allocated to private markets. With market volatility persisting in 2025, demand for private credit secondaries is likely to remain strong as a tool to manage portfolio risk.
Investors are also increasingly recognising secondaries as a proactive liquidity management tool. Rather than simply offering a method to offload underperforming assets, it allows investors to rebalance their portfolios through full or partial sales of fund interests, rather than waiting for distributions. Private credit secondaries also attract a more diversified LP base as the most uncertain phase of the loan lifecycle has typically passed, offering a lower‑risk entry point than blind‑pool commitments.
Comparison to Alternative Secondaries Asset Classes
Compared to more established asset classes, credit secondaries are smaller in terms of transaction volume but are growing rapidly; private equity secondaries remain the largest, accounting for approximately 53% of activity.2 Although private credit still lags behind venture/growth in respect of LP-led deals, it has surpassed both venture/growth and infrastructure in GP-led deals.3 This momentum suggests that credit secondaries are carving out a distinct niche in the market.
Deal Pricing
For private equity, credit and other related asset classes, secondaries buyers typically model pricing on portfolio NAV. While buyout strategies take the lead in terms of supply and pricing, credit secondaries priced at 92% of NAV on average in H1 2025, up from 91% at the end of 2024. Pricing strength in this space is supported by substantial fundraising into private credit and sustained demand for senior direct lending interest.4
Conclusion
Although private credit secondaries remain small in value compared to more established asset classes, they are expected to continue to grow and support the shift towards increasingly active portfolio management. For clients, the key consideration is whether credit secondaries align with their investment objectives beyond the current market trends. It remains to be said that the coming years will be an exciting time for both private credit secondaries and the private credit market more generally.
Footnotes
1 Preqin Releases Private Markets in 2030 Report
2 Jefferies-Global-Secondary-Market-Review-July-2025.pdf
3 Jefferies-Global-Secondary-Market-Review-July-2025.pdf
4 Jefferies-Global-Secondary-Market-Review-July-2025.pdf
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
