For years, the private credit established itself as a relatively homogeneous category within investment portfolios. For many investors, investing in private debt was, in practice, equivalent to investing in a single source of stable returns. 

However, what is happening in the market today is making one thing clear: not all private credit is the same. 

In recent months, the private business development companies (BDCs) —one of the main gateways to this asset class—have faced increased demand for liquidity, along with a more competitive environment for originating credit. This phenomenon is due, in part, to a normalization following several years of exceptionally high returns, driven by high rates and attractive spreads. 

As the cycle progresses, the corporate direct lending, where most BDCs operate, has begun to show signs of tightening. Increased competition among managers, coupled with the return of some banks to this market, has led to a gradual compression of spreads and less favorable origination terms. 

At the same time, the market has once again been reminded of a structural characteristic of private credit: its illiquidity. Redemption requests for vehicles with periodic windows have put pressure on their liquidity mechanisms, highlighting the inherent tension between long-term assets and semi-liquid structures. 

In this context, rather than an exit from private credit, what we are seeing is a rotation within the asset class. 

The difference lies in the type of strategy. While corporate direct lending faces greater competition and shrinking returns, other segments continue to enjoy more favorable conditions. In particular, financing backed by real assets—such as asset-backed lending and private real estate lending—continues to operate in markets with lower capital intensity and more defensive structures. 

Unlike corporate direct lending—where risk stems from a combination of leverage at the fund level and at the level of the financed companies—real-asset-backed strategies tend to be structured around the value of the collateral, reducing reliance on corporate leverage as the primary source of risk. 

For long-term investors, the conclusion is clear: the value in private credit no longer lies solely in access to the asset class, but in selection of the right segment. 

Because if this cycle is proving anything, it is that diversification within the private credit sector is not a risk, but an opportunity. 

Jaime Cruz 
Portfolio Manager, US Private Debt, Fynsa AGF