Key Takeaways
- • Private credit assets under management are forecast to reach $2.64 trillion by 2029, according to Preqin data, representing substantial growth from the current $1.7 trillion baseline.
- • Despite a slow start to fundraising in 2024, the private credit asset class continues to demonstrate resilience and long-term growth momentum across institutional investor portfolios.
- • Private debt performance is projected to average 12.0% annually through 2029, with distressed debt strategies expected to outperform, signaling sustained investor demand for alternative credit solutions.
- • The expansion reflects continued bank disintermediation and demand for liquidity-driven structures as institutional investors—including pension funds and family offices—allocate capital to private credit strategies.
Summary
Private credit is positioned for significant expansion over the next five years, with Preqin forecasting the asset class will grow to $2.64 trillion by 2029 from approximately $1.7 trillion today. This projection underscores the structural tailwinds supporting alternative credit markets despite recent headwinds in fundraising activity during 2024. The forecast reflects broad institutional investor confidence in private credit as a core allocation, particularly among pension funds and alternative investment professionals seeking yield and diversification beyond traditional lending markets.
The growth trajectory is underpinned by favorable performance expectations. Private debt is forecast to deliver average annual returns of 12.0% through 2029, with distressed debt strategies anticipated to generate even higher returns. These performance metrics remain attractive relative to public credit and equity benchmarks, supporting continued capital flows into the asset class. The resilience of private credit despite market volatility and a slower 2024 fundraising environment demonstrates the durability of investor demand for alternative credit solutions.
Structural factors are accelerating private credit's expansion, particularly bank disintermediation and the shift toward liquidity-driven credit structures. As traditional banks maintain capital constraints and reduce lending capacity, private credit providers have captured a growing share of middle-market financing, sponsor-backed lending, and specialty credit opportunities. This shift has made private credit an increasingly indispensable component of institutional portfolios. The continued capital raising and deployment across direct lending, distressed debt, and structured credit strategies suggests the asset class will maintain momentum through the forecast period, benefiting managers with strong track records and institutional relationships.
The growth trajectory is underpinned by favorable performance expectations. Private debt is forecast to deliver average annual returns of 12.0% through 2029, with distressed debt strategies anticipated to generate even higher returns. These performance metrics remain attractive relative to public credit and equity benchmarks, supporting continued capital flows into the asset class. The resilience of private credit despite market volatility and a slower 2024 fundraising environment demonstrates the durability of investor demand for alternative credit solutions.
Structural factors are accelerating private credit's expansion, particularly bank disintermediation and the shift toward liquidity-driven credit structures. As traditional banks maintain capital constraints and reduce lending capacity, private credit providers have captured a growing share of middle-market financing, sponsor-backed lending, and specialty credit opportunities. This shift has made private credit an increasingly indispensable component of institutional portfolios. The continued capital raising and deployment across direct lending, distressed debt, and structured credit strategies suggests the asset class will maintain momentum through the forecast period, benefiting managers with strong track records and institutional relationships.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.