Article Beyond the headlines: Navigating today’s private credit landscape in Europe

Private credit continues to dominate headlines — and not always for the right reasons. Between concerns about rising defaults, liquidity constraints, and the growth of evergreen vehicles, investors are asking whether the asset class is nearing a breaking point. But a closer look at the data reveals a far more balanced story. Understanding the fundamentals behind private markets is essential to making informed allocation decisions.

Evergreen funds are expected to grow their share over time

Private capital has raised trillions of dollars over the past decade. Evergreen funds, which are a newer type of vehicle with more liquidity than drawdown funds, are only around 14% of total private markets assets under management. Most of these funds to-date are institutional ($2.3 trillion), but wealth-focused evergreen funds are expected to continue to grow their share over time, from $500 billion in 2025 to $1.1 trillion in 2029.

Headlines around defaults, such as First Brands or Tricolor, have contributed to a sense of mounting risk. Yet these events reflect idiosyncratic company issues rather than systemic stress, in our opinion. Just as in public credit, there will always be segments of the market experiencing pressure. What matters most is thoughtful strategy selection and manager discipline.

Why investor education matters more than ever

Private credit fundamentals remain broadly healthy. Evergreen funds — which offer more regular liquidity than traditional drawdown funds — make up roughly 14% of private markets AUM and continue to grow.¹ Understanding these vehicles — how they are structured, how they generate yield, and how liquidity provisions operate — is crucial. Private markets may offer compelling opportunities but come with unique risks that require careful consideration.

What’s worrying investors? Tech exposure and credit quality

Investor anxiety has recently shifted toward software and technology borrowers, driven by concerns about artificial intelligence (AI) disruption. But both public and private credit markets have exposure to this theme, and software companies represent just one segment of the borrower universe. While pockets of weakness exist, we believe the overall health of private credit suggests that today’s environment is far from distressed.

Manager selection is more critical than ever

Private credit has outperformed its public counterparts across 1-, 5-, and 10-year periods, yet the dispersion of returns across managers is significant. This underscores an important point: not all private assets are created equal. The expertise, underwriting discipline, and risk management approach of a manager can dramatically influence outcomes.

Conclusion

Private credit is neither the bubble some fear nor the flawless engine its most ardent supporters promote, in our opinion. Instead, it is a maturing and increasingly diverse market segment — one that offers meaningful opportunity for investors who take the time to understand its nuances.

For a deeper dive into the data, trends, and analysis behind these insights.