Private credit: Performance vs. liquidity

10 snips

Apr 7, 2026

Jake Pollack, Head of North American Credit Trading and Global Credit Financing, gives market color on private credit. He covers investor liquidity in retail vehicles and underlying credit performance. Topics include PIK mechanics, software and services exposure, price discovery around the 2028–2029 maturity wall, marking practices, and potential regulatory scrutiny.

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INSIGHT

Liquidity Versus Performance Drives Private Credit Narrative

Private credit stress is driven by two forces: investor liquidity in retail vehicles and underlying credit performance.
Only ~15% of direct lending AUM sits in retail vehicles, while institutional holders control most of the $1.8tn market, so liquidity issues are concentrated.

ADVICE

Enforce Redemption Caps To Preserve Fund Health

Protect long‑term holders by enforcing existing redemption features like 5% quarterly caps to avoid forced sales of illiquid assets at poor prices.
Remember retail headlines harm sentiment even if caps are a designed feature protecting institutional investors.

INSIGHT

Defaults Low Now But Spreads Are Widening

Default rates in direct lending remain below historical leveraged‑loan norms but are expected to rise via mean reversion and sector risks.
Spreads are widening in direct lending, signaling markets are repricing for higher future defaults.

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In this episode of Making Sense, Stephen Dulake, co-head of Global Fundamental Research, is joined by Jake Pollack, head of North American Credit Trading and Global Credit Financing, to take stock of where private credit stands today. They unpack the two forces shaping the narrative — investor liquidity in retail vehicles and underlying credit performance — alongside investor focus areas like PIK (payments in kind), software and services exposure, and early markers of AI-related disruption. The conversation closes with views on marking practices, the 2028–2029 maturity wall and ongoing price discovery, and what increased regulatory scrutiny could look like as the market continues to grow.

This episode was recorded on March 31, 2026.

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