Secondary market sales of private credit assets are expected to rise sharply in 2025, as institutional investors seek to free up capital in the face of ongoing market volatility and tighter liquidity conditions. According to industry analysts and fund managers, the trend reflects a growing need for flexibility within a sector that has expanded rapidly over the past decade.
As reported by financial institutions active in the space, a significant number of limited partners (LPs) are preparing to offload portions of their private credit holdings, often at discounts, to reallocate funds or manage risk exposure. The move comes amid rising interest rates, slowing deal activity, and increased uncertainty in traditional lending markets, prompting a reassessment of portfolio strategies.
Private credit—a form of non-bank lending primarily targeting middle-market companies—has attracted billions in capital from pension funds, insurance firms, and sovereign wealth funds in recent years. However, as cash needs rise and asset valuations soften, investors are turning to the secondary market to unlock liquidity without waiting for repayments from long-dated loans.
According to data from market participants, transaction volumes in the private credit secondary market are projected to surpass $30 billion this year, up from an estimated $20 billion in 2024. Much of the activity is being driven by sellers looking to rebalance exposure, but also by buyers seeking opportunistic entries into high-yield assets at reduced prices.
While the secondary market for private equity has long been established, private credit is emerging as the next frontier for secondary trading, supported by evolving deal structures and increasing transparency. Firms specializing in this niche are ramping up capital commitments, viewing the current environment as a rare window to acquire assets at favorable terms.
Analysts note that this shift could benefit the broader private credit ecosystem by enhancing liquidity and providing more dynamic exit routes for investors, ultimately making the asset class more appealing in volatile times. However, the wave of selling also reflects growing caution among institutions about the durability of returns and the resilience of borrowers amid tighter financing conditions.
