Private credit's pitch is simple: high returns + downside protection.
This promise fueled trillions in AUM growth in the decades following the financial crisis.
But the easy money is over.
Today, competition, lower rates and defaults are cooling off the asset class.
Why private credit is stalling:
Competition is compressing spreads
Base rates have fallen
Defaults are ticking up
Read the full breakdown below.
Private Credit Has Come Back Down to Earth
Private credit has grown accustomed to eye popping returns.
Post-covid, juicy margins and a high interest rate environment fueled years of double digit yields.
But recently, this trend has reversed.
In 2025, returns fell to 9%, well below the levels experienced in recent years.
Competitive Squeeze
One of the main drivers of the decline is simple: the space is more competitive.