Private credit secondaries have emerged as one of the fastest-growing sectors within the broader secondaries market, posting dramatic expansion over the past several years. According to Evercore, transaction volume surged from a modest $2.4 billion in 2020 to $20 billion in 2025 — a nearly eight-fold increase that underscores the strategy’s rapid maturation.
The expansion of secondaries markets signal a maturing primary market, and few asset classes illustrate this better than private credit. Over the past decade, the asset class has grown rapidly, fueled in large part by bank retrenchment in the aftermath of the global financial crisis. Despite banks reopening their balance sheets to lower-rated corporate debt, private credit remains a permanent fixture in the lending ecosystem. Greater certainty of execution, more flexible terms, and a streamlined relationship model, combine to make private debt a structurally attractive financing solution for sponsors.
The rise of the asset class has equally been a function of institutional investors seeking diversification beyond traditional fixed income. Insurers and pension funds, in particular, have increased their private credit allocations, attracted to the predictable, long-dated cash flows that can be structured to closely match liability-driven investment needs. Together, these forces have pushed assets under management from roughly $300 billion in 2010 to about $1.6 trillion by 2023, with projections pointing to nearly $3 trillion by 2028.
Notably, these headline figures largely reflect senior direct lending in North America. When accounting for fast-growing segments such as asset-backed finance and opportunistic credit alongside lenders’ push into the burgeoning private credit markets in Europe and Asia, the projected expansion of the primary market appears even more pronounced. Ultimately, as private credit continues to scale and mature, its secondary market is deepening in parallel, following a familiar path traced by more established private market asset classes like private equity and infrastructure.
LPs and GPs are increasingly turning to the secondaries market to manage portfolios. A key driver of supply is the constrained liquidity environment of recent years. While private credit investments generate regular interest and are contractually self-liquidating, significant liquidity events typically arise through refinancings tied to exits or M&A.
Therefore, the slowdown in private equity transactions in recent years has resulted in weaker distributions to LPs. For example, most direct lending funds carry five- to seven-year terms. However according to HarbourVest, for 2019 vintage funds (now six years old), the average DPI sits at just 0.6x. As allocators face larger NAVs than anticipated in their private credit portfolios, they’re turning to secondaries for liquidity and portfolio rebalancing.
These liquidity pressures are also beginning to surface in BDC portfolios. Many of the semi-liquid private credit evergreen vehicles in these portfolios are facing rising redemption requests, creating a potential opening for dedicated credit secondaries funds to step in as liquidity providers. In its 2025 Credit Secondaries Review, Jefferies identified transactions involving BDC portfolios as one of the key themes expected to shape the market over the course of the year, noting buyers may benefit from attractive pricing and market dislocations.
Beyond liquidity, LPs are increasingly using the secondaries market as a tool for active portfolio management. Private credit remains an illiquid asset class, and investor circumstances evolve over time. Asset–liability considerations, leadership changes, and shifts in portfolio strategy can all prompt investors to reassess existing exposures.
For some, that reassessment reflects a desire to reposition portfolios toward more opportunistic strategies or emerging areas of credit, such as infrastructure debt or asset-backed finance. Others may look to streamline GP relationships that offer overlapping, yield-oriented exposure.
Additionally, as private credit funds mature, returns tend to shift from a more levered profile toward an de-levered one. For LPs seeking more of a levered return profile, selling in the secondary market allows them to exit at their preferred return profile and redeploy capital into earlier-stage funds with higher leverage potential.
GPs are also increasingly using the secondaries market as a portfolio management tool. In fact, GP-led transactions have emerged as a larger driver of credit secondaries activity than LP-led deals over the past year, representing the majority of transactions.
Specifically, continuation funds — buyout secondaries’ darling structure — have garnered adoption among credit secondaries investors. Several large-scale transactions that would have been unlikely just a few years ago closed throughout 2025, including Antares’ $1.2 billion continuation vehicle and TPG Twin Brook’s $3.0 billion credit CV, led by Coller.
Private credit continuation funds, however, function very differently from their private equity counterparts. In private equity, CVs are increasingly used to retain high-quality assets, often through highly concentrated, single-asset vehicles that allow sponsors to extend ownership and capture remaining upside.
In credit, the objective is far less about asymmetric positions. GP-led credit portfolios typically comprise large pools of loans. The motivations also differ. Credit CVs are not designed to “ride the upside,” but to address portfolio construction and capital management needs. Repackaging mid-life performing loans — either to re-lever them or generate liquidity for new origination — is one common use case.
However, today the primary application for these vehicles is to solve for tail-end assets, in which some of the loans start to have equity-like characteristics or maturity mismatches. For example, CVs have played a key role in helping lenders manage loan extensions for underlying companies — a trend that has become increasingly common in recent years due to amend-and-extend deals and payment-in-kind features.
From a demand perspective, private credit secondaries are gaining traction with institutional investors, supported by a number of structural advantages. Unlike direct lending, where upside remains capped at par, secondary purchases at a discount generate premium returns that exceed primary market exposures. Notably, returns are more heavily driven by discounts than in private equity secondaries, where asset appreciation tends to compose a larger component of the return profile.
Most of the underlying funds accessed through private credit secondaries are already in their monetization phase, allowing investors to capture private credit returns over compressed time horizons. Entry points are often more attractive as well.
Default risk tends to be front-loaded in private credit when management teams and sponsors can be new to lenders, leverage is at its peak, and EBITDA adjustments are most aggressive. By contrast, secondary portfolios compose seasoned loans. With weaker borrowers largely revealed, buyers can more accurately assess default risk and price investments accordingly, offering enhanced downside protection.
Further, investors can build credit exposures across shorter ramp-up periods, diversify across vintages, geographies, and industries, and access segments where they lack presence but seek strategic positioning. For example, many investors now manage mature senior direct lending portfolios in the US and North America, where there is greater concentration in sectors like software and healthcare.
Secondaries can offer an efficient path to establish positions in alternative strategies such as asset-backed finance and infrastructure debt and across varying geographies. Cumulatively, these factors position private credit secondaries as a differentiated return source for LPs seeking exposure to resilient credit portfolios — a dynamic that continues to fuel demand.
Although the private credit secondaries market remains undercapitalized, favorable tailwinds are driving increased capital formation and deal flow. Historically, one challenge has been a mismatch between capital and opportunity, with the space largely populated by equity secondaries investors seeking equity-style returns from credit assets.
As institutional demand has grown, dedicated pools of capital — better aligned with the opportunity set — have begun entering the market. For example, Coller Capital closed its second credit-focused secondaries fund in 2025 at $6.8 billion, Ares recently raised a $3.2 billion debut vehicle, and Pantheon is reportedly seeking $6 billion across multiple credit secondaries strategies.
Importantly, greater capital inflows narrow bid-ask spreads and help participants achieve better pricing, creating a more supportive backdrop for deals to come to market. With a wide-angle view across infrastructure and buyouts, large multi-strategy asset managers are especially poised to capitalize on the expanding private credit secondaries market, leveraging proprietary insights to sharpen secondaries underwriting.
Greater market penetration is also likely to support increased capitalization. Private credit secondaries currently account for less than 1% of primary market activity, compared with 2-3% for private equity. While some may argue that a revived M&A and exit environment could slow recent growth trends, the market has matured, with participants recognizing benefits that extend beyond immediate liquidity needs.
Senior direct lending may be particularly affected by what appears to be a broader “private for longer” trend in buyouts. As sponsors hold portfolio companies for extended periods to drive value creation, longer loan durations may become a structural feature rather than a temporary phenomenon. Expansion of private credit secondaries across the broader private credit universe will likely deepen activity further, creating additional capital and deal flow opportunities.
Explore our Private Credit and Secondaries Reports to understand the trends shaping direct lending and the broader secondaries market.
Get updates in your inbox
Learn how Chronograph can streamline your private capital investment monitoring and diligence