The global private credit market has witnessed tremendous growth in recent years. The funded private credit market currently stands at approximately US$ 1.8 trillion in 2026, marking a tenfold increase from 2009 according to McKinsey data. Since mid-2025, as the global economy has benefitted from the interest rate reduction cycle, coupled with receding inflationary pressures, M&A and IPO activity picked up speed from previous years. This growth in activity has in turn spurred the private credit market to new heights because private credit lenders are exceptionally well-positioned to provide private equity sponsors and borrowers with quick execution as well as innovative capital solutions and financing structures.

We expect that this momentum will further benefit from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation’s joint issuance on December 5, 2025 rescinding the March 2013 Interagency Guidance on Leveraged Lending. The agencies confirmed that they expect institutions to manage leveraged lending exposures consistent with general principles for safe and sound lending; the rescission of these guidelines (when taken together with the accompanying FAQs for implementing such guidelines) would allow lenders to gauge their own risk appetite when engaging in leveraged lending. This rescission will in turn give private credit lenders enhanced flexibility to provide financings to private equity sponsors and borrowers with a wider range of credit ratings and leveraged levels. By allowing private credit firms to make their own determination as to their individual risk appetites, the recission will encourage institutions to develop their own specific definition of “leveraged loans”, which would allow some private credit lenders (particularly the institutions that handle very competitive mandates) to be able to underwrite financings at a greater leverage level. This shift will greatly widen the scope of investment deals and financings in which private credit lenders might participate in, further contributing to the exponential growth of the private credit market.

On the supply side, the rise of partnerships between insurance companies and private credit lenders is another notable driver of the private credit market. These partnerships have led to a steady flow of insurance capital in search of higher returns (as compared to public bonds) straight to private credit. Given that insurance companies are aligned with private credit funds in terms of their respective financial obligations and cash flow requirements, the private credit market has grown significantly through these partnerships. Insurance companies now allocate almost 25% of their bond portfolios to the private credit market — a percentage we expect to continue to rise over the coming years. This influx of capital has provided the private credit market with impressive scope to engage in large-scale deal origination and boosted stability and certainty in their pipeline funding requirements. Private credit providers on the other hand have provided insurance companies with knowledge and expertise in structuring capital solutions for companies, including for larger-scale deals, which the insurance companies can now indirectly participate in.

Given this infusion of insurance capital and partnerships between insurance companies and private credit lenders, we see integrated credit and insurance platforms with the ability to provide borrowers and sponsors alike with bigger investment opportunities, competitive pricing, and innovative capital structuring and solutions across a broad set of credit ratings — from investment grade corporate ratings on one end to more complex asset-based securities on the other. We have also seen a shift in focus in the documentation of these insurance company deals, as private credit lenders have sought to create customized covenant packages for private equity sponsors and borrowers. Market participants are developing a greater understanding of industries and spaces that insurance companies can participate in, and can therefore adjust the documentation to reflect the various limitations and considerations promulgated by regulatory bodies and institutions at the origination of these financings.

The scale of insurance companies’ private credit investments has been clearer from recent regulatory changes. As of January 1, 2025, the National Association of Insurance Commissioners reclassified select sections of the insurer’s financial statements in their guidelines, which provided greater insight into the private credit investments and activities of the insurers. We have seen that insurance companies have also been inclined to diversity their portfolio beyond traditional direct lending to corporate borrowers into newer areas such as asset-backed finance, including financing for equipment, data centers, and specialized receivables. Within this space, private capital is inherently appealing to sponsors and borrowers because of its ability to fill funding gaps with structured debt solutions that can be tailored according to the borrower’s needs and the features of the assets being financed. For insurers, this approach aligns with their financial goals and capital efficiency requirements, while increasingly solid partnerships with fund managers are allowing insurers to access such deals without having to develop all the functions that would be required in house if the insurance companies were to be investing directly in such borrowers or assets.

With this influx of capital from insurance companies, private credit lenders have been incentivized to find and originate investments in high-quality assets. Consequently, private credit lenders have sparked a boom in investments in the artificial intelligence (AI) infrastructure space, which has become a major theme in private credit markets. For digital infrastructure, which is now viewed as an early AI-advan­taged industry, we have seen companies shift their financing requirements from being funded from their own balance sheets to large, pro­ject-based investments through which private credit is playing an increasingly crucial role. Private credit providers are funding the upfront costs of financing the purchase of graphics processing units, building data centers, and upgrading power grids, thereby gaining a foothold in the AI investments industry, which is positioned for meteoric growth. Many asset managers anticipate that the AI industry will require significant investments for upfront spending on computing, data centers, and energy infrastructure through at least 2030. This demand has spurred increased borrowing and more activity in both public and private markets. As private credit lenders and infrastructure debt are able to execute on investments as well as provide specialized capital solutions, they have emerged as key components of the AI industry’s financing strategy.

For example, JPMorgan reports that US data center-related bond issuance reached US$15.1 billion in 2025, surpassing the total for 2024. They estimate that around US$150 billion will be needed in 2026–2027 to convert short-term construction loans into long-term financing for nearly 20 gigawatts of data center capacity. As such, the significant and urgent need for financing for the development and growth of AI infrastructure is clear. Given that only US$53 billion was issued in the past dec­ade, a wider range of additional debt options and financing sources, such as corporate loans and private capital, will be necessary to meet this demand, likely leading to higher costs to attract more investors.

Beyond infrastructure within the AI industry, devel­opers are also rapidly and increasingly borrowing in order to bridge the gap between their immediate spending needs and the future revenue stream that AI is expected to generate. This gap, in turn, will create more opportunities for private credit lenders to finance a wider scope of AI developers. With the momentum of the current AI surge, private credit lenders will see opportunities to combine asset-backed financing with clear exit strategies for nascent companies, while effectively managing industry related risk.

With increased supply of capital from insurers, increased demand from the AI industry, and positive regulatory developments, private credit lenders are strategically positioned at the intersection of supply and demand and likely to continue to the rapid growth of the private credit market.