Private Credit's Structural Transformation of Investment Banking: From Crisis Instrument to Deal-Making Infrastructure, 2008 to 2029 (Oxford Journal of Student Scholarship)

Summary

• Global private credit assets under management grew from approximately $2 trillion in 2020 to an estimated $3.5 trillion in 2025.p.1
• Underwriting banks absorbed collective losses exceeding $600 million on the $15 billion debt package for the leveraged buyout of Citrix Systems in 2022.p.2
• Bank lending to private equity firms rose 57% in the first half of 2025, signaling a structural partnership model between commercial banks and private credit managers.p.3
• Direct lending generated gross returns averaging 11.6% across seven rising-rate periods since 2008.p.11
• Direct lending constitutes the largest strategy in private credit, accounting for approximately 60% of global private credit assets under management.p.11
• Wealth channel assets under management in private credit expanded from approximately $100 billion in 2020 to an estimated $500 billion in 2025.p.15
• Quantitative scenario models project the asset class will reach between $3.5 trillion and $6 trillion by 2029.p.1

Key insights

1. Nine of the twenty largest private credit managers are now major private equity firms.p.1
2. Direct lending delivered average returns of 11.6% across seven rising-rate periods since 2008, roughly 200 basis points above the long-run mean.p.1
3. The top ten private credit managers account for an estimated 40% of total market assets under management.p.12
4. The Cliffwater Direct Lending Index delivered a gross return of 10.0% and a net return of approximately 9.2% for the twelve months ending in 2024.p.13
5. Morgan Stanley estimates an $800 billion global financing pipeline for artificial intelligence infrastructure and data centres over the next five years.p.14
6. Apollo projects the total addressable market for asset-based finance globally at between $5 trillion and $8 trillion.p.15
7. Major commercial banks have extended approximately $95 billion in credit lines and financing commitments to private credit funds globally.p.16
8. Fitch's tracked default rate for U.S. direct lending rose from near zero in 2022 to approximately 5.7% by early 2025.p.17