USA Trends and Developments Contributed by: Stelios G Saffos, Dan Seale, Peter Sluka and Alfred Xue, Latham & Watkins LLP
dollars. He draws on a sophisticated understanding of the market and a commercial perspective to advise private credit funds and investment banks. A pioneer in the private credit space, Alfred has led the practice through multiple market evolutions.
Latham & Watkins LLP 1271 Avenue of the Americas New York, NY 10020 USA Tel: +1 212 906 1200
Email: pr@lw.com Web: www.lw.com
Private Credit Grows Stronger and More Mature The global private credit market continues to grow exponentially; the size of the funded private credit market stands at approximately USD2 trillion today (which is ten times the size of the same market in 2009), according to McKinsey & Company data. Relat - edly, private credit dry powder has reached record levels of USD450–550 billion. The need to put that money to work is driving competition for assets in key industries, including infrastructure to drive the artificial intelligence (AI) boom. Sources of private credit are growing, with a notable trend in the insurance industry, while fund structures and documentation are evolving, with a rise in retail and semi-liquid vehicles. And of course, the relentless quest to find high-quality assets and investments means that certainty and speed of execution make all the difference in capitalising on increasingly narrow windows of opportunities. In 2025, we saw incredible deal flow in private credit – including the blockbuster USD23.7 billion acquisition of Walgreens Boots Alliance by Sycamore Partners – building off the close of 2024 when our firm advised on six billion-dollar-plus transactions in the space of two weeks. Deal flow in 2025 included more jumbo unitranche facilities executed on short timelines, multiple acquisition financings backed by jumbo uni - tranche, and complicated and highly structured hybrid instruments. Reflecting on our own deals as a signifi - cant portion of the market as a whole, we outline the contours of the private credit market and the factors that we expect will drive private credit usage in 2026.
New Insurance Guidelines Underpin Private Credit Evolution Partnerships with insurance companies have become a major force in private credit markets, providing sig - nificant scale, stability, and expertise in structuring deals. Insurance companies now allocate about a quarter of their bond portfolios to private credit and are expected to continue increasing their investments in this area. This influx of insurance capital reflects the higher returns private credit bonds offer as compared to public bonds, the ability to match cash flows with insurers’ financial obligations, and the development of partnerships between managers and insurers that enable large-scale deal origination. Two main factors are driving this trend. First, public and private markets have blended to the point that private credit now offers an attractive option for large, investment-grade financings. These deals are often done privately to avoid affecting public markets while ensuring speed and certainty. Second, banks are shifting from being purely competition for direct lend - ers to acting as facilitators and partners, which has expanded market-based lending. With more capital raised by funds, they have been able to build teams to execute on a greater number of strategies with dif - ferent return hurdles. This in turn has led to more flex - ibility for borrowers, including those that are public companies or not sponsor-backed. Regulatory changes have shed more light on the scale of insurers’ private credit investments. Effective from
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