Key Takeaways
- • Private credit has grown nearly tenfold over 15 years to an estimated $2 trillion in AUM, according to Moody's Ratings, but scandals, regulatory pushback and AI-related fears are raising questions about retrenchment in 2026.
- • Blue Owl's share price has been roughly halved over the past year, with a 10% plunge on February 3 and a year-to-date decline of over 40%, while Apollo Global Management and BlackRock have written down some large private credit loans.
- • Executives at borrower First Brands Group were charged in late January with "multi-billion dollar fraud" by Manhattan federal prosecutors, with BlackRock and Jefferies among the nonbank lenders with exposure.
- • Software companies, roughly 20% of private credit loans, face potential disruption from heavy AI bets, which analysts warned could lead to significant private debt losses.
- • Europe captured nearly half of global private credit funds raised in the first half of 2025, with European assets projected to reach $800 billion-$900 billion by 2028 and global AUM approaching $4 trillion by 2030.
Summary
Private credit has been one of the fastest-growing segments of the global financial system over the past 15 years, expanding nearly tenfold to an estimated $2 trillion in assets under management, according to Moody's Ratings. Recent developments, including scandals in the US, regulatory scrutiny in the UK and fears about artificial intelligence, have led some observers to ask whether 2026 could bring retrenchment in private credit markets.
Leading firms are under pressure. Blue Owl, the largest of the group, has seen its share price cut in half over the past year, including a 10% drop on February 3 and a year-to-date decline of more than 40%. Apollo Global Management and BlackRock have written down some large private credit loans. Transparency remains a central investor concern: in late January, executives at middle-market auto parts supplier First Brands Group were charged with "multi-billion dollar fraud" by federal prosecutors in Manhattan, who alleged they deliberately concealed large amounts of debt from lenders. BlackRock and Jefferies were among the blue-chip nonbank lenders with exposure. Software companies, which account for about 20% of private credit loans, are seen by industry analysts as vulnerable to AI-driven disruption, potentially leading to significant private debt losses.
Regulators are weighing systemic risk. In early January, the UK House of Lords Financial Services Regulation Committee concluded there were insufficient data to determine whether private markets are systemic, while endorsing the Bank of England's focus on their interconnectedness with banks. University of Oxford professor Ludovic Phalippou argues that private credit funds are not banks, do not take deposits or promise daily liquidity, and so face slower-moving credit losses rather than classic runs. He expects tighter disclosure, better data, stronger valuation governance and stricter oversight of retail sales and insurer holdings rather than bank-style regulation.
Growth is shifting geographically. More than 70% of global private credit AUM is North American, according to BlackRock, but Europe captured nearly half of global private credit funds raised in the first half of 2025, per a Moody's Research report. BVCA chief executive Michael Moore cited a 285% increase in UK private credit loan issuance and 130% in the EU between August 2022 and April 2024. Kroll Bond Rating Agency has warned that private loan defaults could rise, particularly among middle-market borrowers. Phalippou cautioned that a sharp downturn, a high-profile scandal or insurer capital pressure could slow growth.
Leading firms are under pressure. Blue Owl, the largest of the group, has seen its share price cut in half over the past year, including a 10% drop on February 3 and a year-to-date decline of more than 40%. Apollo Global Management and BlackRock have written down some large private credit loans. Transparency remains a central investor concern: in late January, executives at middle-market auto parts supplier First Brands Group were charged with "multi-billion dollar fraud" by federal prosecutors in Manhattan, who alleged they deliberately concealed large amounts of debt from lenders. BlackRock and Jefferies were among the blue-chip nonbank lenders with exposure. Software companies, which account for about 20% of private credit loans, are seen by industry analysts as vulnerable to AI-driven disruption, potentially leading to significant private debt losses.
Regulators are weighing systemic risk. In early January, the UK House of Lords Financial Services Regulation Committee concluded there were insufficient data to determine whether private markets are systemic, while endorsing the Bank of England's focus on their interconnectedness with banks. University of Oxford professor Ludovic Phalippou argues that private credit funds are not banks, do not take deposits or promise daily liquidity, and so face slower-moving credit losses rather than classic runs. He expects tighter disclosure, better data, stronger valuation governance and stricter oversight of retail sales and insurer holdings rather than bank-style regulation.
Growth is shifting geographically. More than 70% of global private credit AUM is North American, according to BlackRock, but Europe captured nearly half of global private credit funds raised in the first half of 2025, per a Moody's Research report. BVCA chief executive Michael Moore cited a 285% increase in UK private credit loan issuance and 130% in the EU between August 2022 and April 2024. Kroll Bond Rating Agency has warned that private loan defaults could rise, particularly among middle-market borrowers. Phalippou cautioned that a sharp downturn, a high-profile scandal or insurer capital pressure could slow growth.
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