As we enter 2026, the credit markets are poised for a transformative year defined by shifting regulatory landscapes and evolving capital structures. The following analysis outlines the primary trends expected to drive industry performance over the coming months.
– Traditional direct private lending faces headwinds in a decreasing rate environment – mid-market banks that were formerly capital constrained remain better “on the ground” originators than their PE counterparts and are operating in a more favorable regulatory environment.
– Private credit and banks will see more in partnership than competition; from back-leverage products to syndication of deals in both directions, the blurry lines will sharpen as buy and sell side define their roles in this new era of private lending.
– Outsize yields will be found outside of traditional asset classes; esoteric, private-label ABF will become an increasing component of credit portfolios.
– ABF originators will drive volume through creative sourcing and structuring; consumer loans remain important but will attract the more attention from long-oriented managers while funds seek larger spreads with less-tested collateral.
– A rapid rise in the single-asset credit secondaries market; hastily underwritten or poorly risk managed private credit deals will trade as funds seek to clean their portfolios and exit assets that drag long term performance.
For a deeper technical discussion on these developments, please contact our Senior Managing Director of Financial Services, Jordan Shapiro.
