Mercer said institutional investors put nearly $300bn into private credit in 2025, while APG and UK scheme Nest plan higher private-market and private-debt exposure.
Investors are staying in despite worries over underwriting, opaque valuations and concentration, especially in software-heavy lending; some are rotating toward middle-market, asset-backed and stronger-covenant strategies.
Support from long-term pension capital is helping stabilise the asset class as retail investors redeem, though critics warn risks may emerge only after years because losses and valuations are slow to surface.
As software lending sours, is asset-backed finance the new safe haven for smart money in private markets?
Are private credit's high returns an illusion, masking risks until a downturn reveals widespread losses?
With banks poised to re-enter lending, is the private credit market facing its first true systemic test?