Goldman Strategist Forecasts Moderation in Private Credit Growth Amid Resilience

Private credit market activity is expected to slow in 2026, according to David Olson, a senior strategist at Goldman Sachs, citing a normalization of lending volumes after several years of rapid expansion. While aggregate private credit issuance is projected to grow 8% year-over-year—down from 12% in 2025—Olson emphasizes that fundamentals remain robust across the sector. The slowdown is attributed to rising borrowing costs and tighter underwriting standards, particularly for middle-market and leveraged transactions. Loan volumes in the $10 million to $50 million range have declined by 14% in the fourth quarter of 2025 compared to the prior year, signaling reduced appetite among private lenders for higher-risk deals. Despite this, default rates in the private credit space remain below 1.2%, well below the 2.5% historical average, indicating strong credit performance. Olson notes that the largest private credit funds—such as Ares Management, Blackstone Credit, and Apollo Global Management—have maintained liquidity buffers exceeding $75 billion collectively, enabling them to absorb volatility. These firms have also diversified their exposure, with 38% of new commitments now allocated to non-transactional, asset-backed lending, reflecting a shift toward more stable cash flows. The market impact is being felt across private equity-backed companies, especially in sectors with high capital intensity like real estate and energy. Firms reliant on short-term private credit facilities are extending maturities and renegotiating covenants, with 22% of such deals undergoing repricing in Q4 2025. Nonetheless, overall financing availability remains above pre-pandemic levels, underscoring the sector’s resilience despite headwinds.