Key Takeaways
- • Neuberger Berman argues the private credit market is far broader than the recent focus on corporate direct lending and BDCs suggests, with a total addressable market across asset-backed finance, infrastructure debt, real estate credit and specialty finance estimated in the tens of trillions of dollars.
- • The entire BDC universe, listed and non-traded combined, totals only about $500 billion according to KBW data as of December 31, 2025, with listed BDCs accounting for roughly $180 billion in assets under management.
- • Neuberger Berman contends non-traded BDC redemptions do not reflect investment performance, as many of the larger vehicles produced high single-digit returns in 2025, and some large vehicles have approached or reached quarterly redemption caps.
- • Institutional private credit dry powder remains around $600 billion in committed but undeployed capital, about half dedicated to direct lending, which the firm sees as a potential offset to semiliquid vehicle outflows.
- • Credit secondaries volume reached approximately $20 billion in 2025, nearly double the prior year according to Evercore, and bank lending to non-depository financial institutions has shown little sign of contraction year-to-date per Federal Reserve data.
Summary
Neuberger Berman argues in a market commentary that the private credit market is considerably more diverse and resilient than recent investor focus on corporate direct lending and business development companies (BDCs) implies. The firm estimates the total addressable market across asset-backed finance, infrastructure debt, real estate credit and specialty finance in the tens of trillions of dollars. By contrast, the entire BDC universe, listed and non-traded combined, amounts to only about $500 billion according to KBW data as of December 31, 2025.
On non-traded BDCs, the firm states that redemption activity does not appear to be driven by investment performance. Per Bloomberg and company filings cited by Neuberger Berman, many of the larger vehicles returned high single digits in 2025, which compares favorably with a range of fixed income alternatives. The firm attributes redemptions to investor liquidity needs and broader portfolio repositioning. It acknowledges that some larger vehicles have approached or reached quarterly redemption caps, which it describes as a structural protection designed to prevent forced asset sales. A hypothetical illustration from Neuberger shows that a stylized BDC with moderate starting leverage of 0.7x could see leverage rise only to 1.2x over two years, with 20% annual investor outflows outpacing 10% annual debt repayments, assuming no portfolio performance change.
The firm distinguishes listed BDCs, with about $180 billion in assets, from non-traded vehicles, noting that listed funds trade on exchanges, have no redemption mechanism and are supported by permanent capital. Neuberger Berman notes, however, that listed BDCs have shown a notable correlation with software and technology equities in 2026, using FactSet data through March 31, 2026, which has raised concern about sector concentration. The firm also points to wide performance dispersion between top- and bottom-quartile listed managers across price-to-NAV, share price performance and non-accrual rates.
Neuberger Berman identifies several potential supports for the sector. Institutional dry powder of roughly $600 billion, per PitchBook data as of June 30, 2025, could offset semiliquid outflows. The firm reports that spreads on newly originated credits have begun to widen in some segments and that lender-friendly terms are becoming more common, though it describes these as early observations. Secondaries transaction volume reached about $20 billion in 2025 according to Evercore, with GP-led structures a growing share, and pricing has been relatively firm. On bank support, the firm cites Federal Reserve data showing little contraction in lending to non-depository financial institutions and no meaningful pullback by the largest U.S. banks, though it expects some selectivity toward managers with less-established track records.
The firm characterizes reports of banks reviewing software-related exposures as standard portfolio oversight and expects private credit managers to diversify away from concentrated software exposure over time. It concludes that performance dispersion among managers is likely to grow and that selectivity, diversification, conservative leverage and strong documentation will matter more as the market matures.
On non-traded BDCs, the firm states that redemption activity does not appear to be driven by investment performance. Per Bloomberg and company filings cited by Neuberger Berman, many of the larger vehicles returned high single digits in 2025, which compares favorably with a range of fixed income alternatives. The firm attributes redemptions to investor liquidity needs and broader portfolio repositioning. It acknowledges that some larger vehicles have approached or reached quarterly redemption caps, which it describes as a structural protection designed to prevent forced asset sales. A hypothetical illustration from Neuberger shows that a stylized BDC with moderate starting leverage of 0.7x could see leverage rise only to 1.2x over two years, with 20% annual investor outflows outpacing 10% annual debt repayments, assuming no portfolio performance change.
The firm distinguishes listed BDCs, with about $180 billion in assets, from non-traded vehicles, noting that listed funds trade on exchanges, have no redemption mechanism and are supported by permanent capital. Neuberger Berman notes, however, that listed BDCs have shown a notable correlation with software and technology equities in 2026, using FactSet data through March 31, 2026, which has raised concern about sector concentration. The firm also points to wide performance dispersion between top- and bottom-quartile listed managers across price-to-NAV, share price performance and non-accrual rates.
Neuberger Berman identifies several potential supports for the sector. Institutional dry powder of roughly $600 billion, per PitchBook data as of June 30, 2025, could offset semiliquid outflows. The firm reports that spreads on newly originated credits have begun to widen in some segments and that lender-friendly terms are becoming more common, though it describes these as early observations. Secondaries transaction volume reached about $20 billion in 2025 according to Evercore, with GP-led structures a growing share, and pricing has been relatively firm. On bank support, the firm cites Federal Reserve data showing little contraction in lending to non-depository financial institutions and no meaningful pullback by the largest U.S. banks, though it expects some selectivity toward managers with less-established track records.
The firm characterizes reports of banks reviewing software-related exposures as standard portfolio oversight and expects private credit managers to diversify away from concentrated software exposure over time. It concludes that performance dispersion among managers is likely to grow and that selectivity, diversification, conservative leverage and strong documentation will matter more as the market matures.
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