Private Credit Growth Risks Market Fragmentation, Says S&P Global Ratings

S&P Global Ratings warns that the rapid expansion of private credit could fragment credit markets. Evan Gunter, lead research analyst for private markets analytics at S&P, highlighted the lack of transparency in private credit compared to public markets during a recent webinar. "Private credit is becoming more complex," Gunter noted, making it harder for investors to assess risks and opportunities amid new structures, technologies, and asset classes.

Private credit funds now manage nearly $1.7 trillion globally, with over $450 billion in dry powder—$150 billion of which is earmarked for distressed debt or special situations. The sector is poised to grow further in corporate lending, offering certainty of execution where bonds and Leveraged loans face volatility. "This shift marks a sea change in credit markets," S&P's report concluded.