The global private credit market, including corporate lending, asset-backed, real estate and infrastructure debt, has reached $3 trillion, research shows.
Industry research from the Alternative Credit Council — the private credit affiliate of the Alternative Investment Management Association, in partnership with EY — shows that corporate lending remains the dominant part of the market, accounting for 60% of overall assets under management. Asset-backed, real estate and infrastructure debt account for the remaining 40% of the market. The association had not made a size estimate for the market prior to this report, a spokesperson confirmed.
The research showed a “significant increase” in the value of fresh capital invested by private credit lenders in 2023, up 64.2% to $333.4 billion, from $203 billion that was deployed in 2022.
The growth in the size of the market and deployed capital both “reinforce the trend of larger firms spearheading the sector’s growth and expanding role in global finance despite challenges in the broader economy,” AIMA said in a news release accompanying the research.
However, increased stress on borrowers from periods of high interest rates, inflation and the long-term impact of the COVID-19 pandemic is reflected in adjustments to loan terms and valuations, the research said. The estimated proportion of loans in corporate loan portfolios that were subject to term adjustments in 2024 rose to an average 11.65%, from 8.1% the previous year. Data is as of the past two valuation periods, the spokesperson said.
“These adjustments remain within forecast scenarios and are consistent with the proactive approach to risk management practiced by private credit funds,” the research said.
Use of leverage has remained consistent by private credit funds over the past decade, with 51% employing 0.1x to 1.5x debt-to-equity leverage ratios, and 31% of funds are unlevered.
In terms of investments by geography and based on up-to-date reported activity, $1.24 trillion of private credit AUM is invested in the U.S., $374 billion is invested in Europe ex-U.K., and $225 billion in the U.K. The remainder of disclosed investments are invested in North America ex-U.S. ($82 billion), Asia-Pacific ex-China and India ($39 billion), South America ($6 billion), China and India ($2 billion each), and the Middle East and Africa ($1 billion).
About half of respondents expect to increase investment in the U.S., European and Asian markets over the next three years.
The research covered 53 private credit managers and investors, collectively managing about $2 trillion in private credit assets. It also included contributions from 26 private credit fund managers, including BlackRock and Apollo Global Management.
The research is available for download on AIMA's website.
