Private Credit Demand Holds, but Investor Caution Deepens

Private credit still has broad support for growth, but the views of investors are diverging from those of the managers and lenders running the funds. Bloomberg Intelligence’s Fall 2026 survey found that gap in expectations for deployment, spread premiums and retail money flows—issues that shape how the asset class may develop.

The survey covered 150 finance professionals from September 14 to 29, 2026. Its results point to continued demand alongside greater concern among investors and limited partners (LPs), who commit capital to private credit funds. For advisors and clients assessing these vehicles, the split matters because strong fundraising expectations do not guarantee that investors share managers’ confidence in pricing or future inflows.

Growth expectations conceal a widening split

Across all respondents, 72% expect private credit deployment to increase over the next 12 months, and 66% anticipate higher institutional fundraising over that period. Nearly 80% expect returns to match or exceed historical levels. The survey describes historical direct lending returns as around 9–10% gross, unlevered annualized.

Investors are less confident about the pace of expansion. Twelve percent now expect deployment to decline, compared with none in the April 2026 survey. Just 18% of investors expect deployment to increase significantly, against 28% of fund managers.

The spread outlook shows a sharper divide. Fifty-six percent of investors expect private credit returns to exceed broadly syndicated loans by 100 basis points or less, up from 20% six months earlier. Fund managers see more room for an advantage: 78% expect premiums of 200 basis points or more. That difference bears watching because spreads help determine the compensation lenders receive for taking credit risk.

“Investors and limited partners are generally more cautious than fund managers and lenders, particularly on deployment, spreads and the duration of the wealth-flow slowdown,” the report says. The survey doesn’t settle which group will prove more accurate. It does show that the people allocating capital are becoming more guarded than the people managing it.

Retail demand remains a point of uncertainty

Despite negative headlines about retail redemptions, 57% of respondents expect wealth and retail allocations to private credit to rise over the next 12 months. Only 12% expect a decline. Banks and lenders were most optimistic, with approximately 60% anticipating growth, followed by fund managers at 58% and investors at 54%.

Most respondents also expect the current slowdown in retail wealth flows to be temporary, resolving within a year. That view was held by 62%, compared with 58% in April. Investors again stood apart: 52% now expect the slowdown to last multiple years or become structural, up from 34% six months earlier.

That disagreement has practical consequences for clients who need to understand when they can access money held in private credit vehicles. If flows recover quickly, managers may face less pressure to adjust fundraising plans. A prolonged slowdown could complicate those plans and make liquidity expectations harder to meet. The survey records expectations; it doesn’t establish how long the slowdown will last.

Asset-backed finance and AI infrastructure draw interest

Asset-backed finance (ABF) was the clearest area of agreement among managers, lenders and investors. Thirty-eight percent of respondents named it the biggest emerging opportunity in private credit, up from 29% about six months earlier. The survey also found that respondents across North America, Europe and Asia expect private credit to replace approximately 15% of traditional fixed-income investment over the medium term, with ABF accounting for around 20% of that displacement.

Insurance-related assets and data center financing were among the sources of momentum cited for ABF. The broader financing needs of artificial intelligence infrastructure feature prominently in the report: private capital, predominantly credit, could fund $1 trillion to $1.5 trillion of the build-out over the next five years. Bloomberg Intelligence’s Data Center Model estimates total AI infrastructure spending of approximately $9 trillion over the same period.

Forty-one percent of respondents identified AI and data center financing as a meaningful opportunity over the next three to five years. The report says that opportunity is concentrated among the largest managers, including Blackstone, Apollo and Ares. Power generation and transmission ranked as the primary lending opportunity, cited by 37% of respondents, ahead of compute and GPU financing. So while demand for AI infrastructure finance may be broad, the survey suggests the largest platforms are best positioned to capture much of it.

Competition, defaults and marks

Bank competition has become a more prominent concern. In April, just 1% of respondents named it as the biggest risk to private credit growth. By September, the share had risen to 20%. Credit quality deterioration remained the leading concern at 28%, followed by macroeconomic and rate instability at 21%. The rise in concern about banks points to a possible change in the competitive environment for corporate lending.

Respondents anticipated higher defaults in a serious downturn, but most placed the increase within a defined range. Seventy percent expect default rates to reach 5–10%, and 39% see a range of 5–8%. The share expecting defaults of 5% or less fell to 15%, from 20% in the previous survey. Those estimates describe expectations under stress, not a forecast of what default rates will be.

Views on valuations have improved substantially. Fifty-three percent now consider private credit marks consistent with underlying value, including 19% who believe they are understated. In April, 72% viewed marks as overstated to some degree. The change signals increased confidence in reported valuations, even as caution about spreads and flows rises.

The survey’s central message is a market with sustained institutional demand and new areas of opportunity, alongside growing investor skepticism about how quickly capital will deploy and how long retail flows may remain weak. Those differences are the key measures to watch as private credit matures.

Source: Bloomberg Intelligence, “BI Survey: Private Credit, Fall 2026: Durable Demand,” published October 19, 2026. The survey was conducted September 14–29, 2026, with 150 respondents. Authors: Paul Gulberg, David Havens and Michael Kaye.

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For related context, see the April 2026 survey and the glossary entry on liquidity.