The Next Era of Private Credit

Source / Author: McKinsey & Company

Publication Date: September 2024

Document with my annotations:

Focus:

This report examines the structural evolution of private credit as it moves from a niche segment to a dominant force in global finance. It analyzes the implications of tighter bank regulation, investor demand for yield, and the integration of technology and tokenization into credit markets.

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Key Insights

• Private credit assets under management surpassed USD 2.1 trillion in 2023, doubling in five years and projected to reach USD 4–5 trillion by 2030.

• The asset class now represents 12% of global private markets, up from 6% in 2015, driven by regulatory constraints on banks and institutional reallocation.

• The largest expansion is occurring in direct lending, particularly for leveraged buyouts (LBOs) and corporate refinancing.

• McKinsey highlights a “re-intermediation” trend where specialized funds are replacing banks in credit origination, underwriting, and distribution.

• Advances in data analytics and tokenization are expected to reshape underwriting, enhance liquidity, and expand investor access.

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Notable Figures

• Market size: USD 2.1 trillion (2023)

• Growth rate: ~14% CAGR (2018–2023)

• Forecast: USD 4–5 trillion by 2030

• Average deal IRR: 8–12% in senior direct lending

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Analyst Take

McKinsey’s report underscores that private credit is no longer an “alternative” but a systemic component of institutional portfolios. The study resonates strongly with LucUnchained.com’s core themes: institutional adoption, tokenization of private markets, and the blurring of lines between traditional credit and digital infrastructure. As tokenization platforms begin digitizing credit receivables and loan participations, private credit could become the first trillion-dollar use case for regulated digital assets.

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Citation:

Source: McKinsey & Company, “The Next Era of Private Credit,” September 2024. https://www.mckinsey.com