Private credit at scale: why infrastructure is becoming a competitive advantage

By Ieva Banyte, Director, Private Credit and Insurance Solutions

Private credit has won the battle for legitimacy. The next challenge is building the infrastructure needed to support growth at scale.

As private credit assets under management continue to expand and structures become more complex, operational capability is emerging as a key differentiator. Loan administration, governance, reporting and portfolio oversight are no longer just back-office functions. They’re increasingly central to how managers demonstrate control, manage risk and meet investor expectations.

Discussions at recent industry events, including SuperReturn Private Credit Europe, Moody’s Credit Frontiers and Global ABS, made clear that the shift towards private credit still has momentum – but the market is entering a phase where operational strength increasingly separates the leading managers from the rest.

Moody’s 2026 private credit outlook expects corporate lending assets under management to exceed $2 trillion in 2026 and approach $4 trillion by 2030, supported by rising global capital demand and a pronounced shift toward asset-backed finance. Moody’s titled the outlook “Growth to accelerate, along with complexity and liquidity risks,” a signal that the next chapter is about managing the market’s plumbing as much as expanding its reach. Banks continue to face regulatory and balance sheet constraints that limit their lending, while investors seek long-duration yield and borrowers need flexible capital for infrastructure, energy transition, defense, AI and data centre investment.

Those drivers are changing the role private credit plays in the financial system. It’s now embedded across asset managers, insurers, pensions, banks and specialist lending platforms, making its continued growth relevant to both investors and the wider flow of capital through the global economy.

Why Europe is private credit’s clearest growth opportunity

Europe is one of the clearest examples of the growth opportunity for private credit. The region remains structurally reliant on bank lending; according to analysis from the World Economic Forum and Oliver Wyman, bank lending accounts for roughly 85% of debt financing for European corporates, compared with about 45% in the United States. Carlyle sizes European private credit at around $530 billion today, growing toward $940 billion by 2030.

As banks continue to step back from sub-scale, long-dated or capital-intensive lending, private credit has room to expand, particularly across mid-market lending, infrastructure, energy, defence, and transition finance.

Europe’s fragmentation adds a layer of complexity, though:

• Multiple markets: Multiple jurisdictions, legal systems and borrower markets can create pricing inefficiencies for managers without local expertise and strong structuring capabilities
• Operational demands: The European opportunity also demands robust governance, reporting and servicing frameworks that hold up across every jurisdiction a manager operates in

In that sense, Europe is anything but a 1:1 comparison with the U.S. market, simply behind in private credit development. Europe is a market with its own growth profile, where dispersion across countries and sectors can create a broader range of lending opportunities and potential sources of return for managers equipped to navigate it.

Private credit liquidity risk is being actively tested

The BDC redemption surge has stress-tested structures

Recent volatility in the U.S. business development company (BDC) market underlined why growth needs to be matched by careful liquidity design. Redemption requests across non-traded BDCs rose sharply from late 2025 into early 2026. According to Cliffwater, redemptions in its index climbed to 4.8% in Q4 2025, up from 1.6% the prior quarter, with several large funds hitting or exceeding their quarterly caps into Q1 2026.

As the CAIA Association has noted, there is a meaningful difference between redemption requests and actual redemptions. Payouts are capped at around 5% of net asset value (NAV) by design, so a spike in exit requests signals investor sentiment, not necessarily credit deterioration. In practice, structures largely held. Where requests exceeded caps, many funds fulfilled the permitted tenders in full. No broader run on private credit materialised.

The private credit market has demonstrated it can absorb pressure, but it also put liquidity terms, valuation approaches and investor expectations under a spotlight that will only intensify as the asset class expands. For a market moving further into the mainstream, resilience depends on whether structures are clearly understood before they’re tested.

Credit quality is next

The next pressure point is likely to be credit quality. Higher-for-longer rates, slower exits and longer hold periods are still working through portfolios. Early signs are visible in the data: Proskauer’s Private Credit Default Index reported a default rate of 2.73% in Q1 2026, up from 1.84% two quarters earlier. Scrutiny is sharpening around loans written in the 2021 and 2022 vintages, when financing conditions were more accommodative and growth assumptions were more optimistic.

Risks are unlikely to emerge evenly. While default rates remain manageable by historical standards, outcomes are increasingly differentiated across sectors, vintages and managers.

Credit performance will depend on sector exposure, leverage, covenant protection and the quality of individual underwriting decisions. For managers, that places greater emphasis on portfolio construction, transparency and operational oversight. Investors will want clearer evidence of how risks are monitored, how valuations are approached, and whether governance and reporting frameworks are robust enough to identify problems before they become losses.

Private credit governance requirements in a more interconnected system

Risk is interconnected

As capital moves through a wider network of banks, insurers, managers and fund structures, investors and regulators increasingly want visibility on where risk ultimately sits.

Banks haven’t disappeared; in many cases, they’ve repositioned around:

• Origination
• Structuring
• Warehousing
• Financing private credit funds, BDCs, insurers and asset managers

Insurance capital is also becoming central to the market’s development. Long-duration insurance liabilities can be well matched to private credit assets, particularly in investment-grade and asset-backed strategies, and regulated insurance balance sheets can help anchor discipline.

But the flows are large and concentrated; Moody’s has flagged that U.S. life insurers’ private and illiquid holdings grew to $807 billion at year-end 2025, around 20% of the industry’s fixed income portfolio, with regulators pushing for greater transparency.

The importance of good governance

Governance is becoming as important as yield. As private credit ecosystems converge, firms need to demonstrate independent credit decision-making, clear investment oversight, transparent pricing of fees and risk, and a disciplined approach to leverage. The market may be more distributed than the banking system it partly replaced, but distributed risk still needs to be understood, monitored, and managed.

For fund managers, this creates a practical challenge. Investors are no longer focused solely on strategy, yield, or track record. As structures grow more complex, investors want confidence that a manager can effectively:

• Administer loans
• Closely monitor portfolios
• Create consistent reports
• Maintain strong governance

Governance becomes even more important as the market expands beyond traditional direct lending. Fund finance, evergreen vehicles, secondaries and insurance-linked structures each bring different liquidity profiles, reporting requirements and risk considerations. Managing each of them well requires reliable data and clear processes to deliver investors timely, accurate information.

The private credit operating model: Infrastructure as competitive advantage

Private credit can redistribute risk in ways that prove more resilient if the right systems are in place. That is where the operating model matters. Loan administration, portfolio oversight, governance and reporting aren’t ancillary to the investment thesis; they’re how managers demonstrate control, consistency and institutional readiness as the market becomes larger and more complex.

The structural drivers behind private credit’s growth are unlikely to fade. Bank retrenchment, investor demand for long-duration yield, and the financing needs of infrastructure, energy transition, defence and AI-related investment all continue to support the market.

Private credit is here to stay, but the managers best positioned for the next phase of growth will be those able to match investment expertise with institutional-grade operating models.

How IQ-EQ can help private credit managers build for what’s next

At IQ-EQ, we help private credit managers build the operational infrastructure to support growth, strengthen investor confidence and meet complex governance, reporting and oversight requirements, all without slowing the business down.

We support managers across the full debt and credit spectrum, in every key jurisdiction, with the services that define institutional readiness:

• Loan administration and agency services: Loan management, interest computation, collateral and covenant monitoring, portfolio reporting, and full loan agency support from primary closing through borrower and lender communication
• Governance, SPV and trustee services: Independent structures and oversight to help managers evidence control and keep risk visible to investors and regulators
• Reporting and regulatory compliance: Multi-currency, multi-GAAP accounting, investor and regulatory reporting, and waterfall modelling designed for structures that span jurisdictions and strategies
• Data and technology: An integrated platform built on Allvue and FIS Investran, with the IQ-EQ Cosmos analytics environment and the DX secure client portal, turning real-time data into consolidated, decision-grade reporting

The result is an operating model that lets managers focus on making good investment decisions, while the infrastructure behind them stands up to scrutiny.

Talk to our private credit team today

About the author

Ieva Banyte is Director, Private Credit and Insurance Solutions at IQ-EQ. She works with private credit managers, insurers and structured credit investors on operating models spanning loan administration, CLO middle office, settlements and governance. She has more than a decade of experience across the private credit ecosystem, having held senior positions at S&P Global Market Intelligence, FIS and Bloomberg.

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