Last year private credit secondaries transactions hit $20 billion, almost double the prior year, as investors sought liquidity in an environment marked by longer holding periods, according to a new analysis by Evercore. That number is still a fraction of the $1.9 trillion private credit market, but the boom may be yet another worrisome sign for private credit, which has been wracked by bad news, write-downs, rising defaults, and redemptions in recent months.
In some ways, the private credit market appears to be tracing the path of the more mature private equity market. In recent years private equity investors have turned to secondaries as a way to raise cash when they did not receive distributions because companies could not be sold.
“The same dynamic has led to increased activity in LP-led credit secondaries,” said Michael Addeo, senior managing director in Evercore’s private capital advisory group.
“Private credit loans are typically repaid as part of an exit event for the company,” he told Institutional Investor. “If the company does not exit ahead of the loan’s maturity, the loan is typically extended to provide additional runway for the company to achieve an exit, which has driven longer holds in private credit funds amidst a more muted M&A and IPO environment over the past few years.”
Just as in private equity, slower exit activity has contributed to lower demand for new funds. Private credit fundraising has been in decline since 2021, just before interest rates soared. It peaked at $340 billion in 2021, according to Evercore, and last year the industry raised only $154 billion. Most private credit secondary transactions were in GP-led deals — also known as continuation funds — which totaled $12 billion last year, a more than 200 percent increase from the prior year.
“As portfolios mature and exposures concentrate, GPs are increasingly using secondary transactions to optimize risk, generate liquidity, and recycle capital rather than relying on natural run-off,” Evercore said in its 2025 private credit secondary market survey.
In private equity, firms have created new vehicles to hold portfolio companies, often as a way to keep investments while also generating cash.
But the same dynamic does not appear to be at work in private credit. “The majority of private credit secondaries portfolios are focused on performing, senior loans, so we have not seen it as a way to offload lower quality credit,” said Addeo.
Private credit secondaries may only account for a fraction of the $226 billion in the secondaries market, but they’ve been growing faster than other asset classes. Last year secondaries activity overall increased by 40 percent, while private credit secondaries grew 80 percent, Addeo said. From 2020 to 2025, the total secondaries market grew 30 percent on an annualized compound growth rate, while the credit secondaries market grew at a 50 percent annual rate.
