Key Takeaways
- • Barclays Private Bank says private credit AUM is forecast to reach $2.6 trillion by 2029, up from about $1.7 trillion today, and argues recent headlines reflect structure-specific and idiosyncratic issues rather than systemic deterioration.
- • The firm cites stable leverage, improved interest coverage as earnings have grown, and manageable default rates as evidence that credit fundamentals remain broadly supportive.
- • Barclays attributes the high-profile bankruptcies, including First Brands and Tricolor, to alleged fraud and misrepresentation in largely public, bank-syndicated deals rather than typical private credit underwriting.
- • Slower private credit valuation adjustments versus public markets are framed as a function of illiquidity and borrower-specific analysis, not a lack of transparency.
- • Scrutiny has centred on evergreen funds, which Barclays notes are still fundamentally illiquid and can face redemption pressure that closed-ended vehicles avoid.
Summary
Barclays Private Bank has published an analysis addressing heightened media attention on private credit in 2026, where coverage has focused on loan valuations, software exposure and a handful of high-profile bankruptcies. The bank argues that much of the concern reflects issues specific to certain fund structures, strategies or individual situations rather than a systemic deterioration across the asset class.
The firm points to continued growth, with private credit assets under management forecast to reach $2.6 trillion by 2029, up from around $1.7 trillion today according to its analysis, which cites Preqin data. Barclays attributes this expansion to banks retreating from certain forms of corporate lending. It also states that leverage levels are relatively stable, interest coverage has improved as earnings have grown, and default rates remain manageable.
On bankruptcies, Barclays says cases including First Brands and Tricolor were primarily public, bank-syndicated transactions driven by alleged fraud and misrepresentation rather than gradual operational decline, and should be viewed as idiosyncratic. On valuations, the bank acknowledges that private credit net asset values adjusted more gradually than public credit as rates rose, but says this reflects the illiquid nature of the asset class and borrower-specific drivers such as cash flows, leverage and covenant performance.
Barclays distinguishes between evergreen (semiliquid) funds, which offer periodic quarterly or semi-annual subscriptions and redemptions, and closed-ended funds, which require full upfront commitments deployed over a defined investment period. Much recent scrutiny has centred on evergreen vehicles, where rapid capital inflows have in some cases encouraged faster deployment and greater lender competition. The bank cautions that even evergreen funds are fundamentally illiquid and can face challenges during heightened redemption requests, which closed-ended funds inherently avoid.
On software, Barclays notes that managers have increased sector exposure and that stress has been concentrated among lower-quality, highly leveraged businesses rather than the sector as a whole. The bank argues that portfolios built on first-lien positions, conservative leverage and strong free cash flow are more resilient. It concludes that private credit remains a long-term strategic allocation, while acknowledging liquidity constraints and credit risk and noting that outcomes will vary by strategy, vintage and manager selection.
The firm points to continued growth, with private credit assets under management forecast to reach $2.6 trillion by 2029, up from around $1.7 trillion today according to its analysis, which cites Preqin data. Barclays attributes this expansion to banks retreating from certain forms of corporate lending. It also states that leverage levels are relatively stable, interest coverage has improved as earnings have grown, and default rates remain manageable.
On bankruptcies, Barclays says cases including First Brands and Tricolor were primarily public, bank-syndicated transactions driven by alleged fraud and misrepresentation rather than gradual operational decline, and should be viewed as idiosyncratic. On valuations, the bank acknowledges that private credit net asset values adjusted more gradually than public credit as rates rose, but says this reflects the illiquid nature of the asset class and borrower-specific drivers such as cash flows, leverage and covenant performance.
Barclays distinguishes between evergreen (semiliquid) funds, which offer periodic quarterly or semi-annual subscriptions and redemptions, and closed-ended funds, which require full upfront commitments deployed over a defined investment period. Much recent scrutiny has centred on evergreen vehicles, where rapid capital inflows have in some cases encouraged faster deployment and greater lender competition. The bank cautions that even evergreen funds are fundamentally illiquid and can face challenges during heightened redemption requests, which closed-ended funds inherently avoid.
On software, Barclays notes that managers have increased sector exposure and that stress has been concentrated among lower-quality, highly leveraged businesses rather than the sector as a whole. The bank argues that portfolios built on first-lien positions, conservative leverage and strong free cash flow are more resilient. It concludes that private credit remains a long-term strategic allocation, while acknowledging liquidity constraints and credit risk and noting that outcomes will vary by strategy, vintage and manager selection.
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