Private Credit's Great Convergence Is Here

The recently published PRISM Private Credit Primer maps a market that has grown tenfold since 2008 into a $3.5 trillion asset class, with projections pointing toward $4 to 5 trillion by 2030. The old walls between public and private credit are coming down fast.

Why it matters: Private credit is no longer a niche sleeve in alternatives portfolios. It is a permanent feature of corporate finance, and the convergence with public markets is rewriting how deals get done, who provides capital, and where the risks actually sit.

By the numbers:

• 63% of leveraged buyouts exceeding $1 billion were financed through broadly syndicated loans in 2025, up from 39% in 2023.

• 400 to 600 basis points of performance dispersion separates top and bottom quartile managers, and the gap is widening.

• 40%+ of capital at leading managers now comes from insurance companies, up from roughly 32% at end of 2021.

• ~$350 billion in retail money has entered through BDCs, interval funds, and semi liquid vehicles.

• 80% of private credit deals still retain maintenance covenants, compared to less than 10% in the syndicated loan market.

• 27+ private credit managers opened UAE offices in 2024 chasing sovereign wealth fund capital.

Between the lines:

• The spread differential between private credit and broadly syndicated loans has compressed to 100 to 150 basis points.

• Bank platform partnerships like Citigroup/Apollo ($25 billion committed) and Wells Fargo/Centerbridge ($5 billion) have gone from experimental to mainstream, jumping from roughly 5% of origination in 2020 to an estimated 25% in 2026.

• Private credit has imported the aggressive documentation practices it was supposed to avoid, and "lender on lender violence" tactics like Serta style uptier transactions have crossed over from syndicated markets.

What to watch:

• The growth story is shifting from corporate direct lending toward asset based finance (a $5 trillion plus U.S. specialty finance opportunity), AI infrastructure financing ($2 trillion plus in data center demand), and European expansion where the market remains underpenetrated.

• Consolidation is accelerating with 41 managers acquired over the past decade, headlined by BlackRock's $12 billion HPS deal.

• Tokenization of private credit vehicles is moving from concept to reality, though the fundamental mismatch between liquid tokens and illiquid underlying assets remains unresolved.

Yes, but:

• Measurement is still the Achilles heel. Appraisal based returns mask true volatility, smoothing suppresses correlation estimates, and factor based performance attribution barely exists.

• The IMF has flagged that a material portion of borrowers have negative operating cash flow, raising questions about whether historical recovery rates of 60 to 80% on senior secured debt will hold for 2026 to 2028 vintages.

The bottom line: Private credit rewards allocators who do the work on manager selection, vintage diversification, and governance infrastructure. It punishes those who treat it as a yield enhancement plug. The era of easy money flowing into the asset class is giving way to one where the difference between top and bottom quartile outcomes will define whether private credit delivers on its promise.