Private Credit Headlines Mask the Bull Case for the Credit Secondary Market

By: Billy Strobel, Head of Credit Secondary Advisory and Chae Park, Senior Vice President, Credit Secondary Advisory

In 2025, total transaction volume in the credit secondary market reached $20 billion, a record high.

The conditions that fueled this ascent remain firmly in place — even as negative headlines about private credit have cast a temporary shadow over the market.

The private credit market has expanded from approximately $300 billion in assets under management a decade ago to more than $3 trillion today. A substantial portion of that capital remains locked in 2015 to 2021 vintage funds, where investors are increasingly seeking liquidity — a task made harder by the slower pace of distributions that has characterized the post-pandemic private markets environment.

The secondary market has emerged as a release valve, allowing GPs to manage fund wind-downs, provide liquidity to investors, and reposition portfolios for future growth, often through continuation vehicles. Last year, GP-led transactions accounted for the majority of activity for the first time ever, representing more than 75% of total volume. Just one year earlier, in 2024, LP-driven transactions comprised 62% of the market.  

GP-led volume in the secondary credit market increased 275% year-over-year to $15 billion, making credit the second-largest GP-led strategy after buyouts. Credit secondary-market pricing remained strong throughout the year, with GP-led transactions averaging 98.5% of net asset value.

Even as uncertainty remains around some segments of private credit, here are six reasons we expect momentum in credit secondaries to continue throughout 2026:

1. Significant Capital Inflows

The secondary credit market has attracted an unprecedented wave of dedicated capital in recent years, with fundraising for credit secondary vehicles reaching all-time highs. This influx has significantly expanded the pool of buyers, intensifying competition for high-quality assets and driving up prices. The dynamic is increasingly reminiscent of where the broader buyout secondary market stood eight to ten years ago. Investors are already underwriting and committing capital well in excess of $500 million per transaction, with select deals attracting checks of $1 billion or more.  

2. Visibility in a Volatile Market

In an environment marked by geopolitical uncertainty, interest rate volatility, and an uneven economic recovery, secondary credit assets offer investors something rare and valuable: visibility.

Unlike new-issue commitments, which carry the risk of not knowing which loans will ultimately be originated, credit secondary transactions involve seasoned, funded portfolios with known yields, established payment histories, and transparent underlying borrowers. These transactions generate immediate cash flow and reduce the J-curve effects associated with primary fund commitments.  

3. Favorable Financing Terms

Financing conditions in the credit secondary market remain robust, with banks, insurance companies, and institutional lenders offering attractive spreads and a range of loan-to-value ratios for buyers. Despite episodic volatility in capital markets in 2025, bank pricing stayed firm, and middle-market CLO spreads hit near-record lows, signaling strong lender trust in both GP performance and loan quality.

4. Growing Appetite for the Middle Market

As credit spreads tighten, investors seeking incremental yield are increasingly turning to mid-sized companies, which can offer higher interest rates, compensating for their somewhat elevated risk profiles relative to upper-middle-market or large-cap borrowers. Secondary transactions offer an effective way to access this segment with reduced blind pool risk and the benefit of existing payment records.

5. Growing Liquidity for BDC Portfolios

Business development companies (BDCs) have emerged as an important new source of secondary seller supply. As BDC shares have traded at declining levels in public markets, investors have increasingly sought alternative liquidity pathways. The secondary market is providing that outlet, allowing BDC investors to monetize their positions at valuations that are attractive relative to public benchmarks.  

6. Secondaries as Seeds for New Strategies

Rather than launching a new fund from scratch, GPs are increasingly exploring the option of seeding a new vehicle with a secondary transaction that transfers assets from an existing fund. As primary private credit fundraising becomes increasingly competitive amid lagging distributions to paid-in capital (DPI), we expect this creative use of the secondary market to grow significantly.

2026 and Beyond

Taking all factors together, Jefferies expects total credit secondary volume to sustain continued growth. Based on deal backlog alone, the first half of 2026 should exceed $15 billion. GP-led transactions are projected to continue commanding an even larger share of total volume, potentially exceeding 80% of the market as GPs become ever more sophisticated in their use of secondaries as a portfolio management tool.

The secondary credit market is backed by the most robust structural support for ongoing growth in its history. With more investors entering the space and credit sponsors facing growing liquidity demands, Jefferies anticipates that the credit secondary market will remain one of the most dynamic and attractive options in the alternative investment landscape.