So where do we stand now. You've warned about underwriting. How poor does it look.Sure. So I think what we're starting to see is just a normalization in the space for far too long. There was lax underwriting standards in direct lending and with too much leverage put on companies that really didn't need that much leverage on them.What we're seeing is not really a crisis, though. What we're seeing is, is a cooling in this market. And what we're seeing is a move in default rates from low single digits, call it ...

With record fundraising after the 2008 financial crisis, direct-lending vehicles have loosened their underwriting standards and are due for a stress test, according to a Pimco analysis of private-credit risks. https://t.co/YeINRVLiWd ...

There's not a systemic problem with private credit. There's only the fact that the 17 good years and the massive growth of direct lending uh from essentially a se inception in 2011 to u uh well over a trillion uh today uh took place at a headlong pace. Was it was it done carefully or not. ...

Back in 2014, a new technological change happened for oil and gas. It's called horizontal drilling or fracking. And that technological change did a couple of things.Number one, it changed the pricing structure for all gas and all gas services would work. And number two, based upon all the capital that was raised. Now all of a sudden, capital dried up because the pricing structure collapsed.And so what we have in software is very similar. We have a technological change which is forever going to change how so ...

Core Insights - The broader private credit markets are reported to be in "good shape" according to Brookfield Asset Management CEO Connor Teskey [1] - There are "undoubtedly" concerns specifically in the area of direct lending, indicating potential challenges within that segment [1] Industry Summary - The overall health of private credit markets is positive, suggesting stability and potential for investment opportunities [1] - Direct lending, however, presents specific concerns that may require closer scrutiny from investors [1]

RT Bloomberg Live (@BloombergLive)Where are we in the credit cycle right now? "Credit, private credit, and direct lending almost get used synonymously. We generally are of the view that credit markets are in good shape,"@Brookfield's Connor Teskey #BloombergInvest @kgreifeld⏯️ https://t.co/PXtOATD1BR https://t.co/zTB9y4GA29 ...

Ares priced its second European direct lending collateralized loan obligation, doubling the total number of private credit CLOs in the region as investors warm to the nascent asset class https://t.co/C59zctJicx ...

Investment Rating - The report does not explicitly state an investment rating for the private credit industry in 2025 Core Insights - Direct lending volume decreased in Q4 2025, marking it as the weakest quarter of the year with $56.6 billion across 189 deals, the lowest volume in two years and the lowest transaction count since Q3 2023 [4] - For the full year 2025, direct lending volume was estimated at $247 billion, down 11% from 2024, with 842 transactions, a 16% decrease from the previous year, yet it was the second-busiest year in at least eight years [4][12] - Buyout financing in Q4 2025 was estimated at $18.2 billion, down from $25.1 billion in Q3, with only 46 transactions, the lowest since Q3 2023 [4] - Private credit/middle-market CLO issuance reached a record of $43.1 billion for the year, despite a quarterly drop to $10.3 billion in Q4 [4] - The outlook for 2026 suggests strengthening M&A activity and improved market sentiment, with expectations for higher transaction volumes [4] - Refinancing activity was robust, with $34.1 billion of direct-lender loans refinanced in the broadly syndicated loan market, an 18% increase from 2024 [4] - Credit spreads remained steady in Q4 2025, with a median of S+475, and 48% of buyout deals fell into the 450-499 bps range, up from 18% in 2024 [4] Summary by Sections Direct Lending Volume & Counts - Q4 2025 saw a decline in direct lending volume and deal count, with the lowest figures recorded since Q3 2023 [4][8] - The annual direct lending volume for 2025 was $247 billion, down 11% from 2024, while the deal count decreased by 16% [12] Buyout Financing - Buyout financing volume reached $81.4 billion for the full year, the highest in at least eight years, despite a decline in deal count to 214 from 248 in 2024 [4] CLO Issuance - Private credit/middle-market CLO issuance set an annual record of $43.1 billion, although Q4 issuance fell to $10.3 billion [4] Market Outlook - The 2026 outlook indicates a strengthening M&A environment and increased transaction volumes, supported by stable financial markets and corporate focus on long-term growth [4] Refinancing Activity - Direct lenders refinanced $36.9 billion of syndicated loans, the highest level in four years, while $34.1 billion of direct-lender loans were refinanced in the syndicated market [4] Credit Spreads - Credit spreads in Q4 2025 held steady, with a median of S+475, and a significant portion of buyout deals fell within the 450-499 bps range [4]

Regional Banks Outlook - Regional banks have suffered from market share loss and direct lending to non-banks [2] - Federal agencies pulled back the leverage limit standard, which is expected to be good news for loan growth for regional banks [2][3] - A steepening yield curve could further benefit regional banks [3][11] - Expectation that regional banks may start to join money center banks in terms of rally in 2026 [4] - The removal of leverage lending limits could be a factor for regional banks' direct lending to catch up next year [10] Money Center Banks Performance - Capital markets are expected to impress even more in 2026, with some gains already priced into the stocks [5] - Continued deregulation is anticipated for money center banks [6] - Money center banks have seen outperformance in loan growth due to indirect lending or non-depository financial institution lending [9] - Consumer strength has translated into credit card growth, benefiting money center banks [9][10] Bank of America Recommendation - Bank of America is favored, as it has underperformed other money center banks by 250 basis points since its investor day [7] - Bank of America offers capital markets activity, margin expansion, and buybacks at a cheaper valuation [7][8]

KKR anticipates a boom in European asset-backed debt markets, following an acceleration in direct lending and deal making across the region https://t.co/fsBKHyoy4s ...