Global private credit assets reached $1.7 trillion in 2025, up from $310 billion in 2010, according to data from Preqin. But the real narrative sits in the details: who’s lending, what they’re financing, and why traditional banking is not keeping the same pace.
“We’re watching a fundamental rewiring of how capital moves,” says Al Christy Jr., founder and CEO of alternative financing firm EquitiesFirst. “Businesses increasingly need financing that doesn’t fit in a standard underwriting box. That gap is what’s driving this market.”
According to the World Bank, small and medium enterprises (SMEs) across 119 developing economies face a financing shortfall of approximately $5.7 trillion, equivalent to 19% of GDP in those markets. Traditional lenders aren’t closing that gap, but some analysts believe private credit can help.
The Financing Gap
Banks excel at certain types of lending. Short-duration working capital with matched liquidity profiles. Investment-grade corporate credit with predictable cash flows. Standard mortgage products.
But there are some areas that traditional lending is not as well-suited for, including financing particularly large infrastructure investments and funding development in emerging markets.
Hyperscalers, companies like Microsoft, Amazon, Alphabet, Oracle, and Meta, are projected to spend more than $600 billion in 2026 on data centers and AI infrastructure. It is difficult for banks to underwrite that level of development at scale.
In emerging markets, private lenders deployed $18 billion through 2025 in regions where bank lending remains constrained. Those deals carry higher yields but reflect genuine scarcity. Capital doesn’t flow as easily to these markets through conventional channels.
Asset-Backed Finance
While corporate lending dominates headlines, asset-backed finance is rapidly emerging as private credit’s next growth frontier, according to Moody’s analysis.
In recent months, TPG committed $1 billion through a forward-flow agreement with Elevex Capital for equipment financing. Apollo deployed $3.5 billion to finance compute infrastructure for xAI. Blackstone partnered with Willis Lease Finance to deploy over $1 billion into aircraft engine assets.
These aren’t traditional loans, but rather forward-flow arrangements where managers commit to purchasing newly originated assets at predetermined terms. The originator gets predictable liquidity. The private credit firm gets a steady pipeline without building origination infrastructure.
Equity-backed financing operates in a somewhat similar territory but with different mechanics. Firms like EquitiesFirst provide capital secured by publicly traded equity holdings. Businesses and entrepreneurs look to maintain long-term exposure to those holdings while using them to finance liquidity.
Traditionally, if you needed capital, you either borrowed against cash flows or you sold assets. But equity-backed financing offers a third option: you structure around the equity you already have. It’s an approach that has gained traction as major equity markets hit new highs.
According to statistics from the World Federation of Exchanges, global equity market capitalization reached $136.3 trillion by October 2025, up nearly 15% year-over-year. That’s a massive expansion in the collateral base available for equity-backed structures.
Banks Are Adapting
The private credit story isn’t necessarily bank versus non-bank.
Major banks have announced partnerships with private credit firms: Wells Fargo with Centerbridge, Citigroup with Apollo, Barclays with AGL Private Credit.
December 2025 brought another shift. U.S. federal regulators withdrew leveraged lending guidance that had capped leverage multiples around 6x. Banks now have greater flexibility in leveraged transactions.
“Regulation shapes everything in this market,” Christy Jr. notes. “When guidelines change, capital flows differently. The withdrawal of leveraged lending limits means banks can re-engage in certain segments, and private credit will adapt.”
The 2026 Private Credit Outlook
Private credit assets under management are projected to exceed $2 trillion in 2026 and approach $4 trillion by 2030, according to Moody’s projections. Funds raised $131 billion in the first nine months of 2025 alone. Analysts expect some level of U.S. interest rate cuts in 2026, easing debt service costs. Private equity dry powder sits at $2.7 trillion, creating pent-up demand for acquisition financing.
Significant portions of high-yield bonds and leveraged loans mature in 2026 and 2027, potentially creating refinancing waves that private lenders are positioned to capture. Asset-backed strategies are scaling rapidly. Digital infrastructure needs long-duration financing. Consumer finance platforms need capital for loan origination.
These conditions underline the fact that private credit is no longer a niche alternative. It has become core infrastructure for how businesses access capital and how investors generate returns outside public markets.
For firms specializing in equity-backed financing—firms like EquitiesFirst—the environment could be particularly favorable. Elevated equity valuations expand pools, and shareholders increasingly view concentrated positions as sources of liquidity rather than locked assets.
This is not to say that this market will be immune to tests. Economic shocks, default clusters, liquidity crunches—all could expose weaknesses. But the structural drivers at the foundation are not cyclical. Banks operate under capital constraints. Businesses need financing that standard underwriting can’t accommodate.
Private credit fills those gaps. It has for fifteen years. The question for 2026 is whether the infrastructure that has grown over that period can handle what comes next.
Sources
Global Private Credit Assets – Preqin Global Private Debt Report
SME Financing Gap – World Bank MSME Finance Gap Report
Private Credit & ABF Market Insights – Moody’s Research
Global Equity Market Capitalization – World Federation of Exchanges Statistics
Disclaimer: The above content is for informational purposes only and does not constitute financial, investment, or legal advice. Asset-backed and private credit investments involve significant risks. Readers are strongly encouraged to consult with a registered investment advisor or a qualified professional before making any financial decisions based on this information.