The Future of Private Credit is Already Here

JanetLee, Santiago former managing director and head of capital markets, DF Capital Management, moderated a panel entitled “The Future of Private Credit is Already Here” at the Family Wealth Report Family Office Investment Forum 2026 in New York. Although going through an uncertain period, she underlines how private credit remains one of the fastest growing areas of global finance.

The following article is from the panel moderator JanetLee
Santiago former managing director and head of capital markets, DF
Capital Management. The editors are pleased to use this content;
the usual editorial disclaimers apply. To comment,
email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com.

Private credit became one of the fastest-growing asset classes
once it emerged as a dominant force in global finance post the
Great Financial Crisis of 2008 (GFC), according to the panel
moderator JanetLee Santiago, former managing director and
head of capital markets, DF Capital
Management. It developed a central role in corporate lending
as traditional banks were constrained by regulation and risk
limits. In recent years, the asset class also grew to encompass a
more diverse array of investors, no longer only the view of
institutions but also increasingly accessible to family offices
and retail investors.

The current environment for private credit markets represents its
most significant stress test since the GFC. Although going
through an uncertain period it nevertheless remains one of the
fastest growing areas of global finance. The global private
credit market is currently estimated at about $2 trillion in
assets under management (AuM) with an expectation for private
credit to double to about $4 trillion by 2030. Private credit
exists across a number of strategies including BDCs, asset-backed
finance and sponsor-backed transactions, and touches nearly every
industry from real estate and healthcare to consumer sectors to
just name a few.

After a period of rapid expansion, in part due to low interest
rates and the retreat of traditional banks, the environment has
shifted sharply. Interest rate uncertainty, rising defaults,
liquidity constraints, and growing regulatory scrutiny have all
contributed to a recent risk-off tone. In addition, risk-off
fears in the first quarter of 2026 and early second quarter of
2026 were in part rooted in concern from private credit’s
exposure to the software sector, which sold off sharply earlier
this year, partially due to fears of AI, tech disruption, and
concerns around capex levels.

The rise in default levels is one clear sign of stress. Fitch
Ratings reported that their US private credit default rate (PCDR)
reached 6.0 per cent in April 2026, the highest level recorded
since inception in August 2024. In the latest report, a majority
of defaults now occur through distressed exchanges and maturity
extensions marking a shift from historical defaults that were
related to PIK introductions. One concern is that this may mask
the extent of borrower weakness. Separately, when looking to the
near future, even when just focused on rated BDCs, there is a
roughly $12.7 billion maturity wall looming in 2026-2027—up 73
per cent year-over-year— thus refinancing risk may remain
elevated.

Liquidity pressure became another defining feature of the current
cycle with some of the largest names in BDCs gating redemptions
in the first quarter of 2026, blocking billions in withdrawal
requests. The gating wave deflated investor confidence,
particularly amongst retail-oriented vehicles, and resulted in
greater scrutiny of valuation practices across the industry.

However, against this backdrop of uncertainty, private credit
remains a foundational element of global markets that continues
to grow. The stress in the current environment is not evenly
distributed. There is a distinction between institutional
platforms with patient capital bases and more retail-heavy
vehicles that may be more vulnerable to redemption cycles. To
illustrate one example, an institutional flagship private credit
fund saw recent redemption requests of about 5 per cent, while a
tech fund that was more retail heavy hit headlines with an
approximate 40 per cent redemption request.

Private credit as a market continues to develop reflecting
opportunity and caution. Some asset-backed finance and specialty
credit strategies are gaining share as investors seek
higher-quality collateral and more predictable cash flows. Some
AA-rated private credit funds have attracted inflows from
investors that are seeking “safety with income.” Although private
credit may offer contractually higher returns and a stream of
income, this should not be confused with being “riskless.” At the
same time, as some are proceeding with caution, certain
exchange-traded funds investing in private credit and business
development companies have seen record inflows, the opposite of
sentiment in headlines.

With attention on the asset class, regulators are also evaluating
the market as concerns regarding leverage and interconnected risk
have emerged. One area where regulators are increasingly focused,
is on bank lending to both private credit and private equity
funds, a roughly $300 billion portion of the market.

Private credit is undergoing this first real stress test in
the post GFC period and is not the same enthusiastic,
yield-chasing environment of the last several years. However, as
the market is under pressure, perhaps one could argue that it is
a necessary leveling period. Importantly, the asset class is not
going away — it is evolving as it further matures alongside an
increasingly broader universe of investors and remains an
important component of global finance. Those that endure will
likely evoke disciplined underwriting and use of leverage, stable
capital, and offer transparent governance.

Disclaimer, views represented in this article are meant to
represent a point in time opinion, and may reference publicly
available information, views do not necessarily reflect the view
of any firm or panelist.