Private credit has historically been characterized by long investment horizons and limited liquidity, requiring investors to hold loans until maturity regardless of changing market conditions. Over recent years, however, the emergence of private credit secondaries has fundamentally changed the asset class, creating an active market where existing loans and fund interests can be bought and sold through negotiated transactions. This evolution has introduced greater portfolio flexibility while creating new opportunities for investors able to identify attractive pricing dislocations.

This report examines the structure of the private credit secondary market, explaining how transactions differ from traditional primary lending. It explores the principal forms of secondary activity, including LP-led and GP-led transactions, continuation funds, securitisations, collateralised fund obligations, private credit CLOs, and fund-to-fund transfers. Unlike public markets, pricing is determined through negotiation rather than continuous market quotations, making due diligence, information quality, and credit analysis essential to investment success.

The analysis also examines the participants that shape the market, including banks, pension funds, insurance companies, general partners, secondary funds, sovereign wealth funds, and opportunistic investors. It highlights how secondary activity is typically driven by liquidity needs, regulatory constraints, portfolio rebalancing, and refinancing requirements rather than changes in underlying credit quality, creating opportunities for disciplined buyers willing to provide liquidity when sellers are constrained.

Particular attention is given to the factors that determine pricing in private credit secondaries. Credit risk, liquidity, valuation uncertainty, and negotiated transaction dynamics all contribute to discounts relative to par value. The report demonstrates how investment returns differ across performing and distressed credit, with healthy loans generating returns primarily through carry and pull-to-par, while distressed opportunities depend increasingly on recovery values, timing, seniority, and disciplined entry pricing.

Finally, the report places the market in its current macroeconomic context, showing how higher-for-longer interest rates, refinancing pressure, and a rapidly expanding universe of maturing private credit assets are accelerating secondary market activity. It concludes that successful investing in private credit secondaries depends not on maximizing yield, but on accurately pricing risk, preserving downside protection, and identifying opportunities where negotiated discounts provide an attractive margin of safety.