INTRODUCTION Contributed by: Stelios G Saffos, Dan Seale, Peter Sluka and Alfred Xue, Latham & Watkins LLP
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
Navigating Opportunities and Challenges in the Global Private Credit Market Looking back on 2025 and looking forward into 2026, the rapidly growing private credit market has emerged as a formidable force in the global financial landscape, offering a compelling alternative to traditional syndi - cated bank lending and other public market products including high-yield bonds. This Chambers 2026 Pri - vate Credit guide provides an overview of trends and developments in the private credit market in the most active jurisdictions, including the United States, the UK and beyond. A Global Perspective on Private Credit Private credit lending to public and private companies has grown exponentially over the last decade. The global private credit market now stands at approxi - mately USD2 trillion – ten times its size in 2009 – with dry powder reaching record levels of USD450–550 billion. Projections from leading analysts suggest global private credit assets under management could approach USD3 trillion by 2028 (and some observ - ers believing that it might have already reached USD3 trillion if dry powder is included). After slower initial development, market watchers are now predicting that Europe’s private credit growth rate may poten - tially outpace the continued growth of the United States, with European assets potentially growing by USD800–900 billion over the same period. The market’s expansion is not confined to any single region but continues as a global phenomenon. In the United States, private credit is an established asset class and has become a staple of corporate finance, offering flexible and tailored solutions to borrowers. Traditional sponsors and corporate borrowers have also looked to private credit to finance a wider range of asset classes, from real estate and infrastructure to
technology and healthcare. In infrastructure, private credit is being used to fund large-scale projects such as renewable energy developments and, increasing - ly, infrastructure related to artificial intelligence (AI), including data centres and power grid upgrades. In Europe, the market expansion varies by country and has been one of the areas of opportunity for US asset managers expanding abroad, with some markets out - performing others with robust growth and growing private credit penetration. In emerging markets, pri - vate credit is beginning to play a pivotal role in bridg - ing the financing gap for mid-sized enterprises. We see this global trend continuing as established asset managers seek increased opportunities in emerging markets and as the leading asset managers continue to exceed their fundraising targets. Key Themes and Trends The guide examines several themes and trends that have emerged as both causes and effects of evolving market conditions. Market consolidation and strategic partnerships The private credit market continues to evolve through a wave of consolidation, with larger firms acquiring smaller players to enhance their market presence and scale. Strategic partnerships between banks and pri - vate credit funds have also become increasingly com - mon, allowing both parties to leverage their respective strengths. This “co-opetition” model enables banks to reduce their risk while maintaining client relationships and provides private credit funds with access to a broader range of investment opportunities. Looking further into 2026, market participants are cautiously optimistic, with a focus on discipline, governance, strong underwriting and better deal structures.
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