Direct lending funds raised a record $129.15bn during the first nine months of 2026 even as lending activity slowed and borrowers increasingly refinanced through syndicated loan markets, according to Private Equity Wire. The $129.15bn fundraising total represents a 35% increase year on year and is the highest nine-month figure recorded by Preqin since its data series began in 2016, according to Private Equity Wire.
Fundraising growth as lending volumes decline
Estimated direct lending volumes declined 28% year on year during the third quarter to $49.77bn, according to PitchBook/LCD as reported by Private Equity Wire. The report describes this dynamic as widening the gap between capital raised and new lending opportunities.
The article says the imbalance is increasing pressure on private credit managers to deploy capital and could result in greater competition over loan pricing, leverage levels, and covenant protections.
Drivers cited: pricing, deal availability, and syndicated market competition
Sunaina Sinha Haldea, global head of private capital advisory at Raymond James, attributed the divergence between fundraising and deployment to a cyclical shortage of attractively priced transactions and increased competition from syndicated loan markets rather than a structural decline in borrower demand, according to Private Equity Wire.
Refinancing flows shift toward broadly syndicated loans
The shift is reflected in refinancing activity during the third quarter, when approximately $16.39bn of direct lending loans were refinanced through broadly syndicated markets, compared with $2.60bn of syndicated loans moving into direct lending, according to the report.
Private Equity Wire reports that this reverses the pattern seen in 2022 and 2023, when volatile public lending markets encouraged borrowers to seek financing from private credit managers offering greater flexibility and execution certainty.
The report says the trend could leave private credit portfolios with a greater proportion of borrowers unable to access syndicated financing, while smaller companies may continue to favour direct lenders because of their specific funding requirements.
Underwriting standards and return expectations under scrutiny
Private Equity Wire reports that the divergence between fundraising and deployment raises questions about whether managers will maintain underwriting standards or accept lower returns to invest accumulated capital.
As widely known context, syndicated loan markets are typically associated with broadly distributed lending led by arranging banks, while direct lending is usually privately negotiated with non-bank lenders.
As widely known context, fundraising totals and quarterly lending volumes can diverge because capital raised is not always deployed on the same timetable as new lending origination.
