Global private credit assets under management increased 17% year-on-year to $4.1tn in 2025, according to research from the Alternative Credit Council (ACC) reported by Bloomberg and covered by Private Equity Wire (https://www.privateequitywire.co.uk/private-credit-reaches-4-1tn-as-industry-group-rejects-wider-market-stress-concerns/).
The ACC said signs of credit deterioration remained concentrated in specific sectors rather than across the wider market, according to Private Equity Wire (https://www.privateequitywire.co.uk/private-credit-reaches-4-1tn-as-industry-group-rejects-wider-market-stress-concerns/).
ACC: investor sentiment has diverged from market conditions
The industry body argued that negative investor sentiment had become disconnected from underlying market conditions, according to Private Equity Wire (https://www.privateequitywire.co.uk/private-credit-reaches-4-1tn-as-industry-group-rejects-wider-market-stress-concerns/).
The ACC’s comments came as concerns have risen over borrower defaults, redemption pressures, and the potential disruption of software businesses by artificial intelligence, according to the report.
Lenders tighten terms in response to AI-related risk
The report found that lenders were responding to potential AI-related risks by demanding stronger loan covenants and higher spreads, and in some cases refusing to extend maturities for vulnerable borrowers.
Michael Small, a partner at KKR, reportedly suggested that professional services businesses could face greater disruption from agentic AI than some software companies, where lenders have concentrated much of their attention.
Survey signals pockets of stress alongside some improvement
The ACC research identified pockets of credit stress, with approximately one-sixth of surveyed funds reporting non-accrual rates above 5%, indicating that interest income was no longer being recognised on a proportion of their loans due to repayment concerns.
Kevin Marchetti, chief investment officer and head of US direct lending at Man Group, reportedly said approximately 70% of lender takeovers were linked to transactions completed in 2021 and 2022, when low interest rates supported elevated acquisition valuations.
Other indicators in the report showed improvement, with the average proportion of loans subject to significant amendments declining to 10.6% from 11.7% in 2024.
The report described such amendments as including payment holidays, maturity extensions, covenant changes, and the introduction of payment-in-kind interest arrangements.
Scrutiny of valuations and liquidity cited
The findings come as private credit managers face growing scrutiny over portfolio valuations and liquidity, particularly among business development companies experiencing elevated investor withdrawals, according to Private Equity Wire (https://www.privateequitywire.co.uk/private-credit-reaches-4-1tn-as-industry-group-rejects-wider-market-stress-concerns/).
Widely known context: Private credit refers to non-bank lending where managers raise capital from investors to originate or buy loans outside public markets.
Widely known context: Non-accrual reporting is commonly used by credit lenders and vehicles to flag loans where interest is no longer being recorded as income due to repayment uncertainty.
