Private credit has moved from a niche allocation to a structural component of European institutional portfolios. Over the past 15 years, the global market has more than tripled in size, far outpacing the growth of the public credit universe. Yet as the asset class has expanded, the way it is framed — often as a single, monolithic exposure — is no longer fit for purpose. For insurers, pension schemes and other European allocators making increasingly sophisticated commitments, how private credit is understood is now as important as whether to allocate to it.

The premise is a simple one: private credit is not one market. Treating it as such risks obscuring where risk is concentrated and where resilience sits.

Beyond the headlines

Private credit is often discussed through the lens of direct lending, and recent headlines have shaped perceptions of the asset class more broadly — despite being concentrated in a relatively narrow segment. Middle Market Direct Lending (MMDL) represents around 30% of the global market, with evergreen and semi-liquid vehicles accounting for only around 15% of that segment. That means little more than 5% of the total global private credit market is directly impacted by the issues dominating recent commentary.¹

Valuation quality, concentration and liquidity matter — but the industry has done a poor job of distinguishing between segments in ways that are meaningful for investors. The risk is overstating challenges in some areas while overlooking resilience in others.

The global, non-bank, non-government private credit market has tripled to more than $3 trillion since 2010,² but growth has been uneven across segments. Corporate Private Placements and Mezzanine Debt have grown more slowly, while MMDL and Asset-Based Finance (ABF) have driven aggregate expansion. The composition of the market — not just its size — is increasingly relevant for investors.

Read the full ‘Thought Leadership’ article at the link below