(27 January 2026 – United States) Private credit firms increasingly turned to selling debt to themselves in 2025, as a prolonged slowdown in private equity exits forced lenders to find new ways to generate liquidity from loans tied to buyout-backed companies.
As reported in the FT, so-called continuation deals in private credit reached a global record of US$15bn last year, up sharply from almost US$4bn in 2024, according to Jefferies. These transactions involve fund managers creating new vehicles to acquire loans from their existing funds, effectively rolling assets forward rather than exiting them.
Many of the loans were originally written to finance leveraged buyouts, but repayments have been delayed as deal activity has stalled and private equity firms have held assets for longer than expected. The result has been a growing backlog of ageing loans across the sector.
Advisers say the surge in capital raised by direct lending funds in recent years, combined with the weak exit environment, has driven more activity in the private credit secondary market. This includes both managers transferring assets into continuation vehicles and investors selling stakes in older funds.
“The amount of capital raised in private credit, coupled with a slowdown in the exit environment for private equity managers, has led to fund investors and credit managers seeking liquidity,” said Todd Miller, global co-head of secondary advisory at Jefferies.
Recent transactions highlight the scale of the shift. Crescent Capital Group last week closed a US$3.2bn continuation fund — the largest yet in private lending — which acquired a portfolio of loans to private equity-backed companies and other assets from an older Crescent vehicle.
At the same time, institutional backers such as pension funds sold record levels of stakes in maturing credit funds, with transaction volumes rising from US$6bn in 2024 to US$10bn last year.
The rise in continuation deals comes as confidence in parts of the private credit market has weakened. Investor concerns over credit quality — heightened by high-profile bankruptcies such as First Brands and Tricolor — have prompted pullbacks from some of the sector’s largest funds, tempering growth in what has been one of finance’s fastest-expanding asset classes.