Private credit concerns ‘over-sensationalised’

Mike Taylor

Managing Editor and Publisher

31 March 2026

Macro concerns about private credit are largely over-sensationalised, according to global investment bank, Barclays.

The company has issued a new analysis acknowledging that some issues exist with respect to private credit but concludes that that, in current form, the asset class “has limited ability to cause material cascading losses that impair the broader financial system”.

The analysis said that while headlines frequently frame private credit as the next fault line in financial markets, the issue is often over-stated.

“Headlines frequently frame private credit as the next fault line in financial markets, with comparisons drawn to past crises driven by excess leverage and opaque structures,” it said.

“While the asset class has undoubtedly expanded, increased leverage within the financial system, and become more interconnected, scale alone does not imply systemic risk,” the Barclays analysis said.

“Not all private credit is created equal. The term “private credit” spans a wide range of assets, structures, and risk profiles. Lumping these exposures together obscures meaningful differences in underwriting standards, leverage constraints, and investor bases.

“Any assessment of systemic risk must therefore narrow its focus to the segments where leverage, opacity, and borrower cyclicality actually intersect, which we believe is most acute in the ~$1.3 trillion of deployed middle market direct lending in the US today,” the analysis said.

The Barclays assessment said that private credit plays a meaningful role in the broader economy by filling financing gaps that traditional banks or public markets are often unable or unwilling to serve.

“It is, thus, an important component of the broader US economy, given that this funding allows businesses to finance operations and support local labour markets,” it said.

“While pockets of stress are emerging, particularly in rate-sensitive and highly levered segments, we believe the industry’s generally modest use of leverage – and its reliance on well-protected “back leverage” structures – materially reduces the risk that these stresses cascade into systemic financial instability.”