Private-credit secondaries sound like distressed sellers cashing out cheap. The market’s real growth engine is something else entirely, and it shifts your risk from the loans to the manager.
Key takeaways
- A private credit secondary is the resale of an existing fund stake or loan portfolio: an exit for the seller, and a way into a portfolio that is already lending for the buyer.
- The market roughly doubled two years running, from ~$6bn in 2023 to ~$20bn in 2025, as private credit itself scaled past $1.7 trillion.
- Pricing has tightened to ~90% of NAV for LP books and ~98% for GP-led deals, so the “buy at a discount” thesis has largely faded. Returns now come more from cash yield, pull-to-par, and information than from a cheap entry.
- The buyer’s edge is manager selection and diligence, not the discount. That is truer than ever now that the manager, not the seller, drives most of the market.
Private credit has become a core institutional holding. Global private debt assets sit at roughly $1.7 trillion, and Preqin expects that to reach $2.64 trillion by 2029 (Preqin, 2024). But the asset class was built to be illiquid. When you commit to a direct lending fund, your capital is locked up for years, and that lock-up is part of why the loans pay what they pay.
That creates a problem the moment an investor needs their money back early, or a fund runs out of runway before its loans mature. Private credit secondaries are how the market solves it. They are the trade that turns a locked-up fund stake into cash for a seller, and a way in for a buyer who wants a portfolio of loans that already exists rather than one a manager has yet to build.
The market for these trades has roughly doubled in each of the last two years. What a private credit secondary actually is, the difference between the two deal types that make up the market, and what the pricing and volume data say about where the growth is coming from are all set out below. The short version of the argument: the story most people tell about this market, sellers cashing out at a discount, describes only half of it, and the smaller half at that.
What private credit secondaries are, in plain terms
A private credit secondary is the purchase of an existing interest in a private credit fund, or of a portfolio of loans, from whoever currently owns it. Instead of committing fresh capital to a new fund and waiting a year or two for the manager to deploy it, the buyer steps into a pool of loans that is already lending and already paying interest.
The market splits into two shapes, and the distinction matters more than any other single thing about how these deals work.
LP-led deals. An existing limited partner, the investor who put money into the fund, sells its stake to a new buyer. The general partner (the manager) stays the same. This is a straight change of owner: one investor out, another in. It happens for reasons that usually have nothing to do with the quality of the underlying loans, which we come to below.
GP-led deals. Here the manager drives the transaction. The most common form is a continuation vehicle: the GP moves some or all of a fund’s loans into a new structure, gives existing investors the choice to cash out or roll their money into the new vehicle, and brings in secondary buyers to fund those who leave. The manager keeps running the same assets, just under a new fund with a fresh clock and often new terms.
There is a third, smaller category: direct portfolio trades, where a bank or manager sells a defined pool of loans outright, sometimes a warehouse it needs to clear off its balance sheet. Pricing there tends to be driven by the buyer’s yield target and loss assumptions rather than by any fund’s stated net asset value (NAV).
One thing private credit secondaries are not: distressed by default. A secondary is simply the resale market for an illiquid asset. In calm conditions these stakes change hands at prices close to their carrying value. Discounts widen when sellers are forced and buyers hold the leverage, which is a feature of the moment, not of the instrument.
Why the market is growing: the data read
Here is where the numbers earn their place. The table below tracks the private credit secondaries market across the three years the modern market has really existed, assembled from Evercore’s credit secondary survey and corroborating data. Every figure is dated and sourced.
| Year | Total volume | LP-led share | GP-led share | Avg pricing (LP portfolios) |
|---|---|---|---|---|
| 2023 | ~$6bn | majority LP-led | small | ~85% of NAV |
| 2024 | ~$10.9bn | ~62% (~$6.8bn) | ~38% (~$4.1bn) | ~89% of NAV |
| 2025 | ~$20bn | ~40% (~$8bn) | ~60% (~$12bn) | ~90-92% of NAV |
Sources: Evercore via Yahoo Finance, 2025; Jefferies, 2025; Dechert, 2025. Volumes are reported estimates and should be read as indicative; different advisers count deals slightly differently.
Two things jump out of that table.
The first is the raw growth. Total volume went from around $6 billion in 2023 to roughly $20 billion in 2025 (Evercore, 2025). That tracks the maturing of private credit itself. When an asset class scales to $1.7 trillion, the pool of investors who eventually want out, and the pool of funds that reach the end of their natural life, both grow with it. The broader secondaries market, private equity included, hit a record of roughly $160 billion in 2024 (Evercore, 2025); credit is the newest and fastest-growing slice of that.
The second thing is the one most coverage misses. Look at the LP-led and GP-led columns. In 2024, LP-led sellers were the market, about 62% of volume. By 2025 that had flipped. GP-led deals rose to roughly $12 billion, tripling year on year, while LP-led volume grew a comparatively modest 15% to around $8 billion (Jefferies, 2025). Continuation vehicles made up around 60% of all credit secondaries volume in 2025 (Alternative Credit Investor, 2026).
That flip is the actual growth story, and it changes what you are looking at as a buyer.
The point most explainers miss: the manager, not the seller, now drives this market
The intuitive picture of a secondary is a seller who needs liquidity. An insurer trimming an allocation, a pension fund rebalancing after public markets fell, an endowment managing its cash. That picture is real, and it is the LP-led market. But the LP-led market grew 15% in 2025. The part that nearly tripled was the part the manager initiated.
Why does a manager choose to run a secondary on its own book? Usually because a fund is reaching the end of its life while its best loans still have room to run, and the manager would rather hold them than sell into a refinancing. A continuation vehicle lets the manager keep the assets, hand liquidity to investors who want it, and reset the fee clock. That last point is not incidental. A continuation vehicle can carry new management and incentive fees on assets the manager already owned, which is precisely why the buyer’s diligence has to move from the loans to the structure.
So the underwriting question is different depending on which half of the market you are in.
In an LP-led deal, the central question is why the seller is selling, because that tells you whether you are buying a good book cheaply or a bad book at any price. Most LP selling is rational rather than panicked: an investor needs cash for commitments elsewhere; the denominator effect has pushed private credit above policy limits after a public-market drop; an institution is cutting smaller manager relationships to focus on fewer; a bank or insurer is managing capital treatment. None of those are red flags about the loans themselves. But a forced or concentrated sale can widen the discount, and separating a liquidity-driven seller from genuine credit deterioration is where the buyer’s edge lives.
In a GP-led deal, the central question is the manager and the terms. You are trusting the same GP that set the NAV to have set it honestly, and taking on whatever new fee and governance terms the continuation vehicle carries. The alignment question, is the manager doing this for the investors or for the fees, sits at the centre of the deal. That is a governance judgement, not a credit one.
What the pricing tells you: the discount thesis is mostly gone
If you have read that secondaries are about buying assets cheaply, the current data will surprise you, and the surprise is the point.
Average pricing on LP credit portfolios reached roughly 90% of NAV in 2025, up from about 89% in 2024 and around 85% in 2023, roughly a 400-basis-point improvement two years running (Evercore via Chief Investment Officer, 2025). GP-led credit secondaries priced even tighter, at an average of around 98% of NAV in 2025 (Evercore, 2025). Deals that once needed a wide discount are clearing in the mid-to-high 90s, some at or above par.
That tells you something concrete about where returns come from. When a diversified, senior, floating-rate loan book trades at 98% of NAV, the buyer is not being handed a bargain on entry price. What they are buying is a cash-yielding portfolio, at a small discount, with far more information than a primary commitment offers. The direct lending strategy underneath these portfolios has historically produced high single-digit to low double-digit annual returns, per the Cliffwater Direct Lending Index (Cliffwater, 2024). A secondary buyer sits on top of that base return, adjusted for the entry price and the fees.
So the real drivers of a private credit secondary return are three things, and price is only one of them.
The entry discount is compensation for uncertainty rather than a free lunch: NAV timing lag, the risk of a mark being adjusted, any unfunded capital you might still be called for, and the fact that you cannot exit easily once you own the stake. If a book is clean and senior, that discount is thin, as the pricing data shows.
Pull-to-par does more of the work. Private credit loans amortise and refinance. Buy a loan at 92 and hold it as it repays at 100, and that eight-point gap is return on top of the interest the loan pays along the way. Seasoned portfolios, where repayments have already started, lean more on cash yield and less on speculative underwriting.
Information is the genuine edge. You are buying a portfolio that already exists, so you can see actual borrower concentration, real covenant headroom, and, critically, how the manager behaved the last time a credit wobbled. Experienced secondary buyers price the manager as closely as they price the loans.
Who runs this market
The growth has pulled in the biggest names in secondaries and produced a wave of dedicated fundraising. The snapshot below is assembled from public announcements as at early 2026, and it is worth dating because these figures move every quarter.
| Manager | Dedicated credit secondaries capital | Source |
|---|---|---|
| Coller Capital | $6.8bn raised for Coller Credit Opportunities II; ~$10.1bn committed to credit secondaries to date | Coller Capital, 2025 |
| Pantheon | $5.2bn raised for PSD III | PE Insights, 2025 |
| Apollo (S3) | $5.4bn for its Equity and Hybrid Solutions Fund I (credit and PE secondaries, NAV and GP lending) | PE Insights, 2025 |
| Ares (with Coller, Barings) | $2.4bn structured funding vehicle targeting private credit and PE stakes; lead sponsor on several large continuation vehicles | PE Insights, 2025 |
Credit secondaries fundraising in the first three quarters of 2025 hit a record $16 billion, more than the previous three years combined (PE Insights, 2025). That is the supply side of the pricing story: with this much dedicated capital chasing deals, discounts compress, which is exactly what the pricing table shows.
The named continuation vehicles show the GP-led shift in practice. Coller closed a $1.3 billion continuation vehicle for a 2018-vintage Ares US direct lending fund, and a $3 billion credit continuation vehicle with TPG’s Twin Brook in 2025 (Alternative Credit Investor, 2026). Ares also led a $2.5 billion continuation vehicle for Arcmont and a $1.7 billion one with Antares. These are large managers using the secondary market to extend their hold on assets they already run, not distressed sellers dumping loans.
How a deal actually gets done
A few mechanics are worth knowing, because they shape the risk.
Most private credit funds restrict transfers, so a secondary needs GP consent, buyer eligibility checks, and full KYC and AML work. Timelines run in weeks to months, not days. That lag matters, because a loan book can move quickly in a downturn while the NAV you are pricing against is often quarterly and backward-looking. A well-run process closes that gap with an information package: the latest NAV, loan-level data, covenant performance, watchlist detail, and a clear read on how the manager marks its assets.
You should also be clear on what you are and are not buying. In an LP-led trade you buy a pro-rata share of the fund’s NAV, the right to future distributions, and the obligation to meet any future capital calls. In many private credit funds capital is called and invested early, so that unfunded exposure can be limited, but you cannot assume it is zero: revolving facilities, follow-on lending, and fund expenses can all create future funding needs. You are buying the fund interest with whatever governance rights, fee terms, and side-letter provisions attach to it, not the underlying loans directly.
Where the risks sit
The biggest risk in this market is the same thing driving its growth. Pricing has tightened to the point where there is little margin for error. When LP books clear at 90% of NAV and GP-led deals at 98%, the buyer is relying on the NAV being right and the loans performing roughly as marked. If the private credit cycle turns and defaults rise from today’s low base, the discount that looked thin in a calm market will look far too thin.
The GP-led shift adds a second risk that did not dominate two years ago: conflict of interest. When the manager who set the price is also the seller and the ongoing fee earner, the buyer’s protection is diligence and alignment, not the market. That is a genuinely different risk from the classic LP-led trade, and it now accounts for the majority of the market.
Neither risk makes the asset class a bad one. They make it one where the buyer’s skill, and the quality of the information they get, decide the outcome far more than the headline discount does.
FAQs
Are private credit secondaries only for distressed sellers?
No. Most selling is rational portfolio management: liquidity needs, rebalancing after a public-market fall, or trimming manager relationships. Distress widens discounts when it appears, but it is not the default reason a stake trades.
What is the difference between an LP-led and a GP-led deal?
In an LP-led deal one investor sells its stake to another and the manager is unchanged. In a GP-led deal the manager moves the assets into a new continuation vehicle and offers existing investors the choice to cash out or roll over. GP-led deals made up around 60% of the market in 2025.
Do you buy private credit secondaries at a big discount?
Rarely, now. LP credit portfolios averaged around 90% of NAV in 2025 and GP-led deals around 98%. The discount is compensation for uncertainty and illiquidity, not a bargain, and it has compressed as dedicated capital has poured in.
Next read
- Private Credit. The core guide to how the asset class makes money.
- Private credit vs private debt. The terminology, cleared up.
- Private credit ETFs. The listed route into the same underlying loans.