2026 Private Credit Outlook

The latest data offers a clear message for credit investors: No systemic stress, but higher scrutiny ahead.

1. Recent defaults were not systemic

According to the report, the September blowups in large borrowers were isolated to issuer-specific issues and the auto sector, not weaknesses in the broader private credit or leveraged loan market. This reinforces what lenders on the ground already see: fundamentals remain intact.

2. Spreads have compressed

With tighter spreads, investors need to sharpen credit selection. The report flags a renewed focus on quality and adequate pricing as pockets of risk re-emerge. The era of “lend to anything at 600 bps” is gone.

3. The asset class still carries a premium

Even after heavy inflows, private credit continues to offer a meaningful yield advantage over public credit. The outlook sees this premium holding through 2026. Direct lending first-lien deals typically run 150–300 bps above public HY in real markets. Unitranche often lands at 8–12 percent all-in, depending on leverage.

4. Downside protection is back in focus

As macro uncertainty lingers, the report highlights strategies that will matter most in 2026:

• Broadly diversified secondaries

• Investment-grade private credit

• Opportunistic / special sits, including distressed

These are the strategies better positioned to absorb volatility while maintaining convexity.

5. No “bubble burst”, but a quality regime

The industry is maturing. Capital is abundant. The winners in 2026 will be lenders with discipline, underwriting clarity and the ability to price risk correctly as spreads compress.