Emerging Market Private Credit Surge Signals Shift in Global Capital Allocation

Private credit investments in emerging markets surged to $18.7 billion in the fourth quarter of 2025, marking a 42% increase from the same period in 2024, according to public transaction data. This growth reflects a broader reallocation of global capital as institutional investors seek higher yields and diversification beyond traditional US fixed-income assets. The trend is particularly pronounced in infrastructure and financial services, with notable activity in South Africa, Indonesia, and Colombia. The shift is underpinned by rising yields in EM local currency debt and a relative tightening in US credit spreads, which has reduced the appeal of dollar-denominated paper. Funds such as Blackstone’s EM private credit arm and KKR’s Global Infrastructure Fund have announced new commitments totaling $6.3 billion across the region since November 2025. These deals often involve structured lending to mid-cap corporates and state-linked infrastructure projects, offering returns averaging 10.2% annually. The market impact is evident in bond indices: the JPMorgan EMBI Global Diversified Index posted a 5.3% gain in December 2025, while the USDZAR exchange rate stabilized at 18.45 after volatile swings earlier in the year. The PCX Private Credit Index rose 7.8% over the same period, signaling strong investor confidence in EM private debt. Financial institutions in emerging economies are also benefiting, with local banks reporting a 21% increase in loan origination volumes linked to private credit funding. This reallocation is reshaping capital flows, with EM equity and bond markets seeing inflows of $4.1 billion in December alone. The trend suggests a structural shift in global asset allocation, with emerging markets increasingly viewed as a core component of diversified portfolios.