Credit Crunched: Surveying the State of Private Credit in 2026

Private credit in the first quarter of 2026 experienced a marked reversal of investor sentiment. Over the past two months alone, large public firms have seen withdrawal requests surpass $10 billion, prompting several managers to impose limits on redemptions. This shift comes after more than $200 billion flowed into the credit market over the previous five years.

As investors reassess their allocation to private credit, we take a data-driven look at the past two decades, leveraging our Cobalt dry powder analytics to contextualize today’s developments. 

Key Takeaways

Private credit has experienced dramatic expansion since 2005, peaking at $340 billion in Q4 2024, up from roughly $10 billion in the mid-2000s.

The momentum accelerated in the current decade as dry powder more than tripled from $100 billion in 2020 to record levels just four years later.

While the three quarters following the peak saw dry powder drop toward $300 billion, an uptick in Q3 2025 pointed to robust fundraising to end that year—before the currently unfolding redemption surge.

Looking Ahead

The increase in redemption requests will almost certainly lead to a change in market dynamics within private credit. More time and data will be needed to determine if it is a temporary or long-term impact.

One plausible market outcome could be a combination of stagnation in dry powder (as firms have less opportunity to deploy the dry powder sitting in their current funds) and less fundraising than in recent years due to a lower LP appetite for this segment of the market.

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