Private Credit Set for Record Growth as Rates Stay High in 2025, Pantheon Outlook
- Editor
- Feb 15
- 2 min read
What's New
In Pantheon's Private Markets 2025 outlook, Rakesh (Rick) Jain, Partner and Global Head of Private Credit, forecasts $150 billion in private credit secondary market deal flow over the next three years, with the sector poised for continued expansion amid higher-for-longer interest rates and growing demand for liquidity solutions.
Why It Matters
The continued "higher for longer" interest rate environment, combined with tight public market spreads, positions private credit as an increasingly attractive alternative for investors seeking enhanced yields and portfolio diversification.
Big Picture Drivers
Rates: Higher-for-longer interest rate environment providing attractive tailwinds for private credit returns
Market Share: Private credit continuing expansion across corporate borrowing landscape, including investment grade market
Liquidity: Growing secondary market driven by demand for enhanced liquidity options and longer holding periods
Valuations: Compressed credit spreads in public markets making private credit relatively more attractive
By The Numbers
42% YoY growth in credit secondary deal flow to $36bn in 2024
76-89% private credit share of loan origination volumes
$150bn projected secondary deal flow over next three years
40-50% CAGR in secondary market growth over past five years
Key Trends to Watch
Secondary Evolution: Deal sizes now regularly exceed $1 billion, with market growth projected at 5-10% annually.
Sector Strength: Defensive sectors like technology, healthcare, and business services show strongest fundamentals.
Risk Landscape: AI spending slowdown, tariff impacts, and consumer industry dislocation pose potential headwinds.
Portfolio Strategy: Increased emphasis on bottom-up analysis and prudent risk management amid high valuations.
The Wrap
Private credit continues to mature as an asset class, with the secondary market emerging as a key growth driver. While opportunities abound, success will require careful sector selection and risk management in an increasingly complex market environment.
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