A good fifteen years after the global financial crisis rewired the world’s credit circuits, a new generation of credit masters now sits in the driver’s seat of corporate finance. From New York to London, and from Amsterdam to Luxembourg, a network of private lenders has steadily taken over much of the business once dominated by traditional banks.
The market for non-bank corporate lending, known as private credit, has grown roughly fivefold since 2010, reaching more than two trillion dollars today. By the end of the decade, the industry expects it to double again, putting it on par with the public leveraged-loan and high-yield bond markets in scale.
The financiers who power Europe’s corporate economy no longer wear the badge of a universal bank. Also known as shadow bankers, they work for asset management giants such as Blackrock, Blackstone, Ares and Apollo, or for institutional allocators such as APG, the 600 billion euro Dutch pension investor that has gradually built an 8 billion euro private-debt book.
“Private credit has become a once-in-a-generation reconfiguration of global capital markets.”
Matthieu Boulanger, Blackrock
“Private credit has become a once-in-a-generation reconfiguration of global capital markets,” said Matthieu Boulanger, head of Europe for Blackrock’s private financing solutions, speaking to European journalists in Frankfurt last week. His team, strengthened by the 2024 acquisition of HPS Investment Partners for 12 billion dollars, manages part of a 370 billion dollar platform spanning corporate lending, asset-backed finance and structured credit. “We’re seeing companies that once would have gone to the bank now coming directly to us.”
The rise of parallel bankers
Private credit emerged after 2008, when capital rules forced banks to retreat from leveraged and mid-market lending. Institutional investors, armed with long-term capital and an appetite for yield, filled the void. Over the next decade, they built a non-bank lending network, channeling savings from pensions and insurers into corporate loans that banks were no longer willing or able to provide.
In its early years the strategy looked irresistible: defaults were low, yields were high and liquidity risks were ignored in a world of near-zero interest rates. That success turned private credit into one of finance’s fastest-expanding arenas.
“Thirty years ago, banks were the predominant providers of loans. Today, private credit fills that role for a generation of borrowers.”
Raman Rajogapol, Invesco
“Thirty years ago, banks were the predominant providers of loans. Today, private credit fills that role for a generation of borrowers,” said Raman Rajagopal of Invesco, speaking at the LPEA Private Markets Conference in Luxembourg.
Rajagopal, whose firm manages about 50 billion dollars in private credit, cautioned that investors must now “be more cautious.” Years of cheap liquidity have blurred distinctions between managers and strategies. “A larger borrower is typically a lower risk than a smaller borrower,” he said. “Diversification and scale still matter.” Yet as markets have become more efficient, spreads have compressed and the illiquidity premium that once defined the asset class is fading fast.
Industry split widens
Diana Ogunlesi, partner at Arcmont Asset Management, Nuveen’s private-debt affiliate, described an industry divided between a few global giants and the rest. “Seventy percent of the capital deployed in European direct lending is managed by the top ten firms,” she told Luxembourg delegates. “Half of all fundraising has been concentrated among just five.”
“It’s really important to understand what you are investing in and who you are investing it with.”
Diana Ogunlesi, Arcmont
That concentration is both a comfort and a concern. The largest direct-lending groups, including Ares, Blackstone, Apollo, Arcmont and ICG, have the scale to structure complex deals and absorb shocks. But their dominance limits choice and heightens counterparty risk. “It’s really important to understand what you are investing in and who you are investing it with,” Ogunlesi said.
Scale, in short, has replaced scarcity as the industry’s main advantage. “Europe is a market of many markets. You need local expertise and defensible business models,” said Blackrock’s Boulanger. His team of nearly 150 credit professionals across European offices has invested more than 40 billion euros over the past five years, focusing on asset-backed lending and corporate loans.
At the growth end of the market, Marten Vading, co-head of Blackrock growth debt, says the focus is on Europe’s innovators. “We fund systemic changes in society, from AI and health tech to climate technology,” he said. “Our goal is to help companies grow without giving up equity.”
That concentration of power is reshaping both competition among managers and the way asset owners such as APG approach risk.
Lead lenders preferred
For long-term asset owners, private credit has evolved from niche to necessity. APG Asset Management, one of Europe’s largest institutional investors, has spent the past five years building a dedicated approach to the asset class.
APG reorganized its credit operations as Dutch pension reforms phased out FTK, a regulatory framework that discouraged large investors from holding long-term, less liquid assets such as private credit. “The new framework makes private credit structurally more attractive,” Menno van den Elsaker, head of alternative credits, told Investment Officer. APG now manages around 8 billion euros (Dutch mortgages excluded) in private debt, with allocations ranging from 1 to 4 percent per client portfolio.
“For us, the key is that managers act as lead lenders, those who can sit at the table when problems arise and find constructive solutions.”
Menno van de Elsaker, APG
“Private credit is very broad, from direct lending to real-asset credit and asset-backed finance,” he explained. “For us, the key is that managers act as lead lenders, those who can sit at the table when problems arise and find constructive solutions. That’s very different from the trading mentality of hedge funds.”
Van den Elsaker is realistic about risk. “If a deep recession comes, we’ll feel it too,” he said. “But unlike during the financial crisis, this is predominantly long-term committed capital. The money can stay invested through the cycle.”
Turning point reached
The wave of capital that fueled the growth of private credit has created its own pressures. Speaking in Luxembourg, Joseph Falcone, chief executive of Haussmann 1864 Capital Management, a US-based private debt firm founded in 2024 by French bank Societe Generale, noted that spreads in the last year have narrowed by roughly a hundred basis points as investors crowd into the space. “People are getting comfortable with the asset class,” he said. “Comfort can mask fragility.”
Falcone’s warning goes to the heart of the debate now gripping the sector: whether investors truly understand what lies inside private-debt portfolios. The demand for data on collateral, borrower quality and fund structure is growing as securitized and fund-finance products proliferate, yet transparency remains limited.
A Goldman Sachs survey earlier this year found that 62 percent of institutional investors plan to increase their private-credit exposure in 2025, despite thinner spreads. More money is chasing lower returns, a paradox that reflects persistent yield hunger even as scrutiny rises.
Even Blackstone, one of the biggest beneficiaries of the boom, now speaks of a turning point. The firm’s president Jonathan Gray told the Financial Times that the “golden age” of private-credit returns has ended, with yields on senior portfolios slipping toward 10 percent, down from mid-teens levels two years ago.
Supervisors fear contagion
Private credit’s shift from niche to mainstream has caught the attention of regulators across Europe. The European Central Bank and the European Systemic Risk Board now flag the sector’s rapid growth and opaque links to the banking system as potential channels of contagion.
ESMA, which brings together the EU’s national supervisors, has called for “improved transparency for non-bank lenders and closer scrutiny of origination standards.” In London, the FCA has urged asset managers to tighten valuation governance and conflicts controls after its 2024 review of private markets. Luxembourg’s CSSF, responding to the rise of semi-open private-debt funds, plans to update its guidance to the sector to strengthen AIFM valuation and liquidity-risk rules.
At the global level, the IMF and the Bank for International Settlements have also raised concerns. The IMF’s Global Financial Stability Report 2024 warned that while immediate systemic risk appears limited, the migration of credit from regulated banks to “opaque private markets” creates vulnerabilities. The BIS added that liquidity mismatches in open-ended credit funds could become flashpoints in a downturn.
Age of the credit masters
The convergence of scale, scrutiny and regulation is reshaping the market. The once-fragmented world of private debt has matured into a concentrated ecosystem dominated by global players — the new credit masters — who now compete directly with banks for mid-sized corporate lending.
The direction of travel remains clear. Generali Investments estimates that private-debt assets will reach 2.8 trillion dollars by 2028, an annual growth rate of about 11 percent. Pensions and insurers, led by groups like APG, are expected to keep allocating to the asset class, drawn by its steady income, low correlation to public markets and floating-rate protection in a world of sticky inflation.
The easy phase of private credit’s expansion is over. Default rates are expected to rise modestly, and the dispersion of returns between managers will widen. The new frontier will be defined not by headline yield but by credit analysis, deal structuring and transparency.
As APG’s Van den Elsaker puts it: “Private credit will remain a key component of our portfolios. But stability will depend on discipline, transparency and alignment of interests, not on the illusion of safety.”