The report reveals appetite for private credit holding steady in 2026, with over two thirds of investors seeking to allocate a majority of their exposure to new relationships. This will be driven by investors expecting to increase their private credit allocations while also carefully scrutinising their existing portfolios in light of investor concerns, creating space for high quality strategies.

Higher risk and higher returning corporate credit strategies emerge as a bright spot for allocations as we enter a lower interest rate environment, alongside diversified ABF exposure, reflecting growing understanding around this complex asset class. Geographic preferences have undergone a slight shift at the margin as LP demand for Asian private credit strategies has almost doubled in comparison to 2025 expectations, reflecting market saturation and high competition in the US.

While investors still favour traditional commingled drawdown structures, a notable 10% increase is observed for preference for evergreen structures compared to 2025 as retail channels exhibit continued demand.

2025 was notable for record allocations to private credit, against a backdrop of claims of systemic risk. LPs surveyed registered concerns about credit quality and underwriting standards in portfolios over the next five years, particularly aggressive lending standards in the upper middle market and portfolio deterioration related to PIK, as market data shows upticks in default rates and ‘bad PIK’.

Jeffrey Griffiths, Partner and Global Head of Private Credit, commented: “In this year’s Private Credit Market Report, we see momentum to increase private credit exposure, especially new relationships, as the asset class continues to mature and become more widely understood by the market. Overall, we expect to see continued growth in 2026, with LPs looking for new manager relationships to provide high-quality, derisked exposure.”

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