Foreword
Welcome to the eleventh publication of the Alternative Credit Council’s Financing the Economy research series. The 2025 edition, produced in partnership with Houlihan Lokey, marks an important evolution in the ACC’s data and research capabilities and our efforts to provide greater transparency and insights on the growth of the private credit market.
Our Financing the Economy research series has been essential reading for those looking to understand the dynamics within the global private credit market. That population has increased significantly during 2025, with the asset class attracting greater scrutiny and attention from investors and policymakers.
The ACC and its members have responded by improving the standardisation and precision of our data collection process to enhance the findings and insights that make Financing the Economy such a useful resource. We believe this approach will benefit policymakers, investors and any other interested parties as they seek to understand how the growth of private credit fits within their policy and asset allocation priorities.
We estimate that the private credit market grew to ~$3.5 trillion in assets under management globally, with the market also seeing record levels of deployment during 2024. This continued growth highlights once again how private credit is now firmly established as a lender of first choice for corporates seeking finance, as well as an increasingly relevant part of the asset-backed, real estate and infrastructure debt finance markets.
We also see private credit continue to expand its footprint across the globe. While the primacy of the US market remains unchallenged, the continued rise of Europe and pockets of growth in Asia means that investors have greater opportunities to consider when deciding where to allocate their capital.
Our research hopefully provides assurance to those who worry about the sustainability of this growth during a period where elevated interest rates and increasing macroeconomic uncertainty present headwinds for significant parts of the economy. Our research suggests that firms are proving themselves capable of managing portfolios through these pressures. Core credit metrics have remained stable and there is a growing sense that the recent period of stress on portfolio companies is beginning to recede.
At the same time, it is encouraging to see that the structures used to invest in private credit assets are also demonstrating similar resilience. The stability of our findings on liquidity management practices and use of investment leverage offers further support for the view that private credit is growing for the right reasons.
This year’s Financing the Economy report provides our most comprehensive assessment of the sector’s growth to date. We hope the data and perspectives within this research offer insights to investors and policymakers on the current state of the market as well as the trends that will shape the next stage of the market’s development.
-
Jiri Krol
Global Head of the Alternative Credit Council, AIMA
-
Cindy Ma
Global Head of Portfolio Valuation and Fund Advisory Services, Houlihan Lokey
Executive Summary
Private credit shows uninterrupted and significant growth
- We estimate that global private credit AUM stood at approximately US$3.5tn at the end of 2024, a 17% increase from our estimate of US$3.0tn at the end of 2023.
- Corporate lending is the dominant segment of the private credit market, accounting for 60% of current investments. Other areas such as ABL, infrastructure debt and real estate debt are increasingly relevant and account for most of the remaining 40% of the market.
- In 2024, respondents to our survey deployed an estimated US$592.8bn across private credit strategies. This represents a 78% year-on-year increase from the US$333.4bn they deployed in 2023.
- Geographically, the US remains the largest market for private credit, accounting for 65% of AUM, but the European market is growing fast due to its strong relative value proposition and a renewed continent-wide focus on investment in energy, transport, digital infrastructure and defence.
- Competition between the private credit and Broadly Syndicated Loan (“BSL”) markets continues to be a key driver of pricing and loan terms, although competitive pressure is expected to ease.
- 76% of private credit capital comes from institutional investors. Retail participation has grown considerably in the past decade to reach an estimated 24% of the investor base for private credit and is expected to grow further.
- Fundraising for private credit in 2025 has been strong, with investors continuing to value the risk-adjusted return, low dispersion rates between managers and the distribution profile of the asset class.
Stable and resilient fund structures
- Leverage levels in private credit continue to be modest. We estimate that aggregate leverage of the respondents to our survey is approximately 32% of their net private credit AUM.
- The weighted average fund level leverage for survey respondents’ largest or flagship corporate lending funds is approximately 43% of NAV.
- 37% of survey respondents’ largest or flagship corporate lending funds are unlevered, while nearly 87% of funds operate on either an unlevered basis or with leverage less than 100% of NAV.
- Nearly 87% of the funds in our sample operate either unlevered or with leverage less than 100% of their NAV.
- Banks continue to be the main providers of financing to private credit funds, but new entrants to the market have increased competition and improved borrowing terms for borrowers.
- 80% of private credit committed capital captured in our survey is held in closed-ended structures. Private credit funds that do offer some degree of liquidity to investors employ liquidity management tools to ensure that the liquidity available remains consistent with the underlying liquidity profile of the private credit assets and the fund’s strategy.
Key indicators reflect stable credit quality of investments and conservative financing
- Non-accrual rates for the flagship corporate lending funds surveyed were at 2.2% on average for corporate lending funds and 1.8% on a weighted AUM basis. Only 10% of respondents reported non-accrual rates above 5%.
- Despite the increase in portfolio stress in the past years, in 2024 core credit metrics remained stable. Other commonly used indicators of defaults and portfolio stress are also declining from recent peaks even if they remain slightly above historical averages.
- Only 10% of respondents reported LTV ratios in the 60-70% range and 17% of companies financed by survey respondents had net debt/EBITDA multiples higher than 6x.
- Falling interest rates and the improving outlook for key sectors of the US and European economies are expected to mitigate portfolio stress and future defaults.
- Loan documentation is being impacted by downward pressures on loan terms, particularly in the US.
Download the report