Private credit faces deployment squeeze as fundraising hits record
XLF•Direct-lending funds raised a record $129.15 billion in the first nine months of 2026, up 35% year on year, while estimated third-quarter lending volume fell 28% to $49.77 billion.
1. Fundraising outpaces lending
Direct-lending funds raised $129.15 billion in the first nine months of 2026, the highest nine-month total in Preqin data going back to 2016. Estimated third-quarter lending volume fell 28% year on year to $49.77 billion.
2. Competition for deals
Sunaina Sinha Haldea of Raymond James said the mismatch reflected a cyclical shortage of attractively priced deals and competition from the syndicated market, rather than a structural shortage of borrowers. She said plentiful capital and scarce deals could pressure lenders to concede on spreads, leverage or documentation.
3. Borrowers shift markets
In the third quarter, $16.39 billion of direct-lending loans were refinanced in the broadly syndicated market, compared with $2.60 billion of syndicated loans moving into direct lending. Tarek Omar of Royce Stone Capital said borrowers able to access both markets would naturally gravitate toward cheaper financing after fees and refinancing costs.
