During a Davos panel this week, Mehreen Khan, economics editor at The Times, noted that private credit barely registered on the gathering’s agenda just a year earlier.
Not One Market, but Many
Christophe De Vusser, worldwide managing partner at Bain & Company, cautioned against treating private credit as a single, monolithic asset class. Its rise, he said, began after the global financial crisis, when new banking regulations pushed traditional lenders out of certain activities and created space for private capital to step in.
“What we’ve seen over the last 15 years is an industry that has been growing pretty much every single year,” De Vusser said, noting that direct lending alone has expanded at roughly 20% annually since the crisis.
But that growth has come with increasing complexity.
“Even if you talk about private credit, there’s almost no such thing as a ‘private credit market’,” he said. “It has so many different components,” including direct lending, mezzanine and asset-backed financing, “and that diversity is one of the reasons this market has been more resilient.”
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A Market That Has Gone Global
Martina Cheung, president and CEO of S&P Global, said private credit has matured from a U.S.-centric niche into a global financing option spanning regions and asset types. What began as lending primarily to small and mid-sized companies has expanded into larger, more complex structures, including digital infrastructure and data centers.
“We’ve seen a very large uptick in interest with digital infrastructure and data centers, for example,” Cheung said. She also highlighted growing movement between private and public markets. In 2025, she noted, nearly twice as many issuers refinanced from private markets back into public markets as moved in the opposite direction. “Issuers are getting quite sophisticated,” she said.
Caution After First Brands
The discussion inevitably turned to First Brands, a high-profile collapse that has arguably become shorthand for private credit risk. Steven Tananbaum, founder and CIO of GoldenTree Asset Management, described the episode bluntly.
“First Brands was a fraud,” Tananbaum said, explaining that what appeared to be a relatively safe debtor-in-possession financing quickly unraveled. “The debt went from 100 cents to around 20 cents in about three months. That got people much more concerned about that space.”
Still, he pushed back on the idea that such failures signal systemic weakness. “You’re always going to see frauds,” Tananbaum said. “The issue is what percentage, and what the knock-on effect is.”
Asked where private credit sits in the broader economic cycle, Tananbaum characterized the environment as neither euphoric nor distressed. “We’re in the part of the cycle where credit is more stressed,” he said. “It’s more hand-to-hand combat, more bespoke. You have to try harder and be more resourceful to get better returns.”
That dynamic, he added, favors experienced managers over passive capital. Tight spreads and elevated defaults mean investors must be deliberate about where they deploy capital and how much risk they are being paid to take.
Yield Still Pulls Capital In
Despite the added scrutiny, yield remains a powerful magnet. De Vusser said insurers, pension funds and long-term investors continue to seek assets that provide stable cash flows with durations that match their liabilities.
“People were looking for yield,” he said, pointing to years of low interest rates that made private credit attractive on balance sheets. Borrowers, meanwhile, value speed and certainty.
Cheung and Tananbaum both pointed to digital infrastructure as a growing focus. Data centers, in particular, have become a key area where private credit can underwrite long-term demand rather than short-term market sentiment.
Tananbaum said GoldenTree looks for businesses with scale and real cash generation. “We tend to be involved with companies with an enterprise value of about a billion dollars,” he said.
Jo Taylor, CEO of Ontario Teachers’ Pension Plan, said private credit plays a defined role within the fund’s broader strategy. The pension plan has roughly C$35 billion allocated to credit, which Taylor described as a way to generate stable, risk-adjusted returns.
“For us, credit is attractive if we can get low-teens yields,” Taylor said. “That actually works quite well on a risk-return basis within our overall portfolio.” He emphasized the importance of knowing what information is being provided. “If you’re not getting enough information,” he said, “it probably doesn’t meet your normal standard of diligence.”
Fraud, Regulation and What Lies Ahead
On regulation, panelists agreed scrutiny is rising, particularly in the U.S., where regulators are watching connections between banks and private credit more closely. Cheung said S&P Global is monitoring default rates across both public and private markets using consistent methodologies.
“At around 5%, defaults are a little elevated,” she said, “but not at a level where we would call this a bubble.”
Looking ahead, the panel described a market that is consolidating and professionalizing rather than retreating. Private credit, they suggested, is entering a more disciplined phase. It’s a market that is still growing, still global, but is also increasingly defined by who can manage complexity rather than who can raise the most capital.
