JanetLee, Santiago former managing director and head of capital markets, DF Capital Management, moderated a panel entitled “The Future of Private Credit is Already Here” at the Family Wealth Report Family Office Investment Forum 2026 in New York. Although going through an uncertain period, she underlines how private credit remains one of the fastest growing areas of global finance.

The following article is from the panel moderator JanetLee Santiago former managing director and head of capital markets, DF Capital Management. The editors are pleased to use this content; the usual editorial disclaimers apply. To comment, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com.

Private credit became one of the fastest-growing asset classes once it emerged as a dominant force in global finance post the Great Financial Crisis of 2008 (GFC), according to the panel moderator JanetLee Santiago, former managing director and head of capital markets, DF Capital Management. It developed a central role in corporate lending as traditional banks were constrained by regulation and risk limits. In recent years, the asset class also grew to encompass a more diverse array of investors, no longer only the view of institutions but also increasingly accessible to family offices and retail investors.

The current environment for private credit markets represents its most significant stress test since the GFC. Although going through an uncertain period it nevertheless remains one of the fastest growing areas of global finance. The global private credit market is currently estimated at about $2 trillion in assets under management (AuM) with an expectation for private credit to double to about $4 trillion by 2030. Private credit exists across a number of strategies including BDCs, asset-backed finance and sponsor-backed transactions, and touches nearly every industry from real estate and healthcare to consumer sectors to just name a few.

After a period of rapid expansion, in part due to low interest rates and the retreat of traditional banks, the environment has shifted sharply. Interest rate uncertainty, rising defaults, liquidity constraints, and growing regulatory scrutiny have all contributed to a recent risk-off tone. In addition, risk-off fears in the first quarter of 2026 and early second quarter of 2026 were in part rooted in concern from private credit’s exposure to the software sector, which sold off sharply earlier this year, partially due to fears of AI, tech disruption, and concerns around capex levels.

The rise in default levels is one clear sign of stress. Fitch Ratings reported that their US private credit default rate (PCDR) reached 6.0 per cent in April 2026, the highest level recorded since inception in August 2024. In the latest report, a majority of defaults now occur through distressed exchanges and maturity extensions marking a shift from historical defaults that were related to PIK introductions. One concern is that this may mask the extent of borrower weakness. Separately, when looking to the near future, even when just focused on rated BDCs, there is a roughly $12.7 billion maturity wall looming in 2026-2027—up 73 per cent year-over-year— thus refinancing risk may remain elevated.

Liquidity pressure became another defining feature of the current cycle with some of the largest names in BDCs gating redemptions in the first quarter of 2026, blocking billions in withdrawal requests. The gating wave deflated investor confidence, particularly amongst retail-oriented vehicles, and resulted in greater scrutiny of valuation practices across the industry.

However, against this backdrop of uncertainty, private credit remains a foundational element of global markets that continues to grow. The stress in the current environment is not evenly distributed. There is a distinction between institutional platforms with patient capital bases and more retail-heavy vehicles that may be more vulnerable to redemption cycles. To illustrate one example, an institutional flagship private credit fund saw recent redemption requests of about 5 per cent, while a tech fund that was more retail heavy hit headlines with an approximate 40 per cent redemption request.

Private credit as a market continues to develop reflecting opportunity and caution. Some asset-backed finance and specialty credit strategies are gaining share as investors seek higher-quality collateral and more predictable cash flows. Some AA-rated private credit funds have attracted inflows from investors that are seeking “safety with income.” Although private credit may offer contractually higher returns and a stream of income, this should not be confused with being “riskless." At the same time, as some are proceeding with caution, certain exchange-traded funds investing in private credit and business development companies have seen record inflows, the opposite of sentiment in headlines.

With attention on the asset class, regulators are also evaluating the market as concerns regarding leverage and interconnected risk have emerged. One area where regulators are increasingly focused, is on bank lending to both private credit and private equity funds, a roughly $300 billion portion of the market.

Private credit is undergoing this first real stress test in the post GFC period and is not the same enthusiastic, yield-chasing environment of the last several years. However, as the market is under pressure, perhaps one could argue that it is a necessary leveling period. Importantly, the asset class is not going away — it is evolving as it further matures alongside an increasingly broader universe of investors and remains an important component of global finance. Those that endure will likely evoke disciplined underwriting and use of leverage, stable capital, and offer transparent governance.

Disclaimer, views represented in this article are meant to represent a point in time opinion, and may reference publicly available information, views do not necessarily reflect the view of any firm or panelist.