Introduction
After over a decade of more-or-less uninterrupted growth, the private credit market came under intense scrutiny in the early months of 2026. A series of high-profile bankruptcies in the leveraged lending markets, combined with broader fears of a so-called “SaaSpocalypse” in the software sector, led to unprecedented redemption pressure on some of the market’s largest funds. Managers of non-traded BDCs – which had grown exponentially in the first half of the decade – found themselves on the defensive as private wealth clients looked to pull billions of dollars from funds in Q1 and Q2.
While retail clients looked to pull money out of the sector, institutions have doubled down on private credit in 2026. Institutional fundraising reached an enormous $190 billion in H1 – just 21% short of 2025’s full-year total of $240 billion – as investors looked to take advantage of a market dislocation driven more by headlines than fundamental credit stress.
Beyond headline fundraising figures, private credit continues to evolve. Specialty finance, once a niche corner of the market, is now firmly mainstream, while managers continue to use tools such as GP-led secondaries deals for more creative purposes, such as seeding new investment strategies or evergreen fund conversions.
Similarly, investors and managers continue to look beyond their comfort zones for new sources of alpha. While North American fundraising has been very strong so far this year, regional diversification is still a top priority. Multi-region and European funds continue to attract large sums of capital, and there are signs of a revival in Asia-Pacific and emerging markets strategies, where investors can often secure more favorable terms than in comparable developed markets credit.
Private credit’s wealth bet runs into trouble
After several years of rapid growth, ’40 Act funds have come under severe redemption pressure in early 2026, as a string of high-profile bankruptcies, coupled with broader concerns about the so-called “SaaSpocalypse” in the software sector, prompted private wealth clients to pull back from direct lending funds.
Blue Owl Technology Income Corp (OTIC), the $5 billion BDC which consists of mainly software, technology and related sector loans, received redemption requests amounting to 38.1% of NAV in Q2.
Redemption requests from the 10 largest non-traded BDCs – which managed a combined $245 billion as of Q1 – averaged 13% (median: 10.1%) in Q1 and 14% in Q2 (median: 12.5%), well above the 5% threshold which allows managers to limit withdrawals.
Elevated redemptions, coupled with loan markdowns, caused ’40 Act AuM to fall slightly from $657 billion in Q4 2025 to $655bn in Q1 2026 after years of steady growth.
According to our analysis, the largest BDCs average around 20% exposure to software loans. However, when “adjacent” sectors – healthcare technology, IT services and business services – are included, this figure is closer to 35%, highlighting a significant pool of loans at potential risk from an AI-specific market correction.
Institutions see opportunity in volatility
In sharp contrast to the negative sentiment pervading the wealth sector, institutional fundraising reached $190 billion in H1 – a 53% increase on H1 2025 and just 21% short of last year’s total of $240 billion.
Direct lending funds raised $100 billion in the first half – doubling H1 2025’s total, and just $6 billion short of last year’s full-year figure of $106 billion. Several large institutions have increased their budgets for direct lending in 2026, suggesting continued appetite heading into the second half of the year.
Large institutions have tended to view dislocation in the BDC sector as an opportunity: CalPERS, for example, expects redemption queues to limit the ability of BDC managers to make new loans, creating attractive entry points for longer-term investors with funds available – a view echoed by LPs including Washington State Investment Board, LACERA and Maryland State Retirement System.
To this end, opportunistic credit and special situations funds raised $40 billion in H1, including sizeable offerings from Blackstone and Ares, which raised $10 billion and $9.8 billion, respectively.
While ’40 Act AuM fell slightly in early 2026, private evergreen funds continued to attract inflows, with overall AuM hitting around $163 billion – up 9% since year-end 2025.
Notably, Sixth Street Partners re-opened its $36 billion flagship, TAO, to new investment, seeking an additional $5 billion to $7 billion in new commitments for the strategy.
Private credit expands its horizons
Continuing a theme from our 2026 Outlook, investors continue to emphasize regional diversification, moving away from the “American exceptionalism” trade which dominated the early years of the decade.
While North American fundraising remains strong, with $71 billion of final closes in H1, multi-region and European fundraising continues to go from strength to strength: in the first half, we tracked $70 billion of fundraising for multi-region strategies, and $44 billion for European funds.
Looking further afield, there are early signs of a potential revival in fundraising for Asia-Pacific and emerging markets private credit strategies. We tracked $5.4 billion in final closes across these two regions in H1 – more than the previous three full-year totals.
Asia in particular is seeing heightened investor interest, with at least seven funds in market targeting over $1 billion in commitments. The New Jersey Division of Investments is among allocators looking at the region, seeing particular opportunities in India, while the City of Fresno is exploring investments in Europe and Asia more broadly.
Some Asian investors – particularly family offices – have reduced exposure to US direct lending in the past year. They have been overrepresented in BDC redemption figures and are instead reallocating to local opportunities.
Meanwhile, managers such as Ninety One and Gramercy are raising sizeable emerging markets funds, seeing the potential for greater returns as well as more robust lender protections than are available in developed markets private credit.
Specialty finance: from niche to mainstream
Specialty finance is no longer a niche corner of private credit. We tracked $37 billion of specialty finance closes in H1, just 22% shy of 2025’s full-year record of $47 billion. With several sizeable funds either already in market or coming to market, 2026 could see specialty finance fundraising surpass $50 billion.
H1 2026 saw several record-breaking raises: Ares’s Pathfinder III became the largest-ever asset-based finance fund, raising $8.5 billion, while 17Capital’s Credit Fund 2 raised $7.5 billion to become the largest-ever NAV lending vehicle.
Other fund financing strategies – particularly capital call/subscription line financing – have gained traction, notably with insurance investors, attracted by short-dated, investment-grade risk with a spread pick-up to public markets. Fund financing strategies raised $12.4 billion in H1 – just shy of 2025’s total of $12.9 billion – while additional capital flowed into evergreen vehicles, particularly in Europe.
GP-led secondaries toolkit expands
Like ABF, the credit secondaries market is quickly establishing itself as a permanent fixture within the broader private credit market.
Over $10 billion of credit secondaries funds have closed in 2026, including first-time offerings from Ares ($4bn) and GCM Grosvenor ($1.2 billion), showing that 2025’s record $16.7 billion in final closes was not an anomaly.
A host of new entrants are breaking into the market, while managers such as Cox Capital Partners are creating a nascent “retail secondaries” market, providing liquidity to investors in ’40 Act funds such as BDCs and interval funds.
Meanwhile, after initially attracting skepticism from investors, GP-led secondaries deals have become much more widely accepted, with 2026 seeing a number of sizeable continuation vehicles on both sides of the Atlantic.
Allocators including San Francisco City & County ERS and Ohio STRS are exploring credit secondaries as a tool to take advantage of market volatility, while consultant NEPC sees the strategy as attractive given compressed returns in traditional direct lending.
In addition to traditional CVs, GP-led transactions are being used in increasingly creative ways: for example, to effect evergreen fund conversions (such as Arcmont’s direct lending CV), and strip sales being used to help GPs seed new investment strategies (Eldridge, Investec, Oaktree, Veld).
Capital solutions and mezzanine funds in demand
With private equity exits remaining challenged and allocators prioritizing DPI, “capital solutions” funds continue to attract significant interest.
These funds typically focus on highly structured investments, deployed flexibly across the capital structure but typically aiming to combine contractual cash flows with upside through warrants or preferred equity.
H1 saw $5 billion-plus closes from Ares, Apollo and Blackstone for capital solutions strategies, while sizeable funds remain in market from ICG, Goldman Sachs, Bain Capital and Sixth Street.
In June, former Blackstone professional Vlado Spasov launched London-based Trimontium Capital with $1.5 billion in commitments – one of the largest first-time private credit launches in Europe.
Tough environment persists for new entrants
A combination of negative headlines and increasing concentration among large managers continues to take its toll on the new launch landscape.
As a result, fewer private credit managers have entered the market so far this year. We tracked 129 credit fund launches in the first half of 2026, an 18% decline from H1 2025’s figure of 157 and 24% below 2024’s high of 170. Even more starkly, just 23 of these funds came from first-time managers, a drop of 50% from H1 2025’s total of 47.
With direct lending fundraising increasingly concentrated among a handful of mega-managers, the majority of new entrants this year will run opportunistic/special situations or specialty finance strategies, which are typically less dependent on scale.
Specialty finance continues to account for a high proportion of new fund launches. While direct lending regained its top spot for new launches in H1, with 48 funds coming to market, specialty finance was not far behind, with 42 launches tracked by us over the same period.
Specialty finance accounted for around one-third of new launches in H1, roughly in line with 2025, and up from 22% in 2024.
Methodology
This report draws on proprietary With Intelligence by S&P Global data covering private credit fundraising, fund launches, evergreen and ’40 Act assets, redemption requests and GP-led secondary transactions. Analysis uses data available through H1 or Q2 2026, with trends assessed against comparable historical periods where available.
With Intelligence is part of S&P Global, delivering end-to-end coverage across the alternatives marketplace. With Intelligence’s proprietary data spans a uniquely comprehensive view of private market activity and relationships, including robust, direct-from-investor allocation data and benchmarking capabilities. We are here to help you leverage comprehensive, connected and actionable private markets intelligence.
