Private Credit: Why the Leading Asset Class of 2025 Remains Strong

Robust Spreads and Expanding Demand

Tikehau CMS's summary shows that despite two years of challenging economic conditions, spreads remain at historically attractive levels. Private unitranche or senior financings currently offer a significant premium compared to listed corporate bonds, while providing notably lower volatility. This situation is due to two key factors: the ongoing caution of European banks—which continue to tighten their lending after rate hikes—and the desire of companies to secure stable financing that is independent of stock market cycles.

This environment creates a favorable ground for specialized players. According to Tikehau, institutional investors—such as insurers, mutual funds, and pension funds—are gradually reallocating their portfolios towards private debt strategies to achieve a risk-return profile that is clearer than on public markets. The demand is especially strong because private credit naturally offers protection against inflation: many financings are indexed, allowing investors to capture positive real rates without experiencing equity market volatility.

The CMS team also highlights a recent trend: the rise of tailored solutions designed for complex situations. Whether for refinancings, leveraged acquisitions, transitional financings, or special situations, investors are seeking detailed and well-structured transactions that can combine contractual protection with yield. Private credit is no longer seen as a substitute for bank credit, but rather as a distinct financial engineering discipline, at the intersection of financing and strategic advisory.

2026: The Year of Major Refinancing

A key takeaway from the presentation is the « refinancing wall post-2020. » Debt taken on during the period of low interest rates is set to mature between 2025 and 2027. Many companies are now finding that traditional banks are not as accommodating as they were in 2020: constrained solvency ratios, tightened regulations, and higher demands for collateral. For a growing portion of the mid-market, private credit is becoming the only viable solution.

This situation creates a favorable environment for specialized funds. As highlighted by Tikehau CMS, refinancing operations can generate particularly attractive risk-adjusted returns, especially when companies have solid fundamentals but suffer from poorly calibrated leverage in a higher rate environment. Where banks hesitate, funds can structure modular transactions with precise covenants, enhanced reporting, and tailored amortization mechanisms.

This granularity explains why private credit is now seen as a stabilizer of the unlisted markets. Unlike private equity, it is less sensitive to valuation cycles; unlike listed bonds, it is less correlated to market flows. For institutional investors, it acts as an intermediate cushion: providing yield with a level of control rarely offered elsewhere.

The dynamic is such that private credit is attracting capital beyond traditional investors. Family offices, foundations, and even some private banks are starting to create dedicated funds. Tikehau also notes the arrival of non-European investors keen on the depth of the European market and the quality of mid-cap borrowers, who are often more robust than anticipated.

Toward a More Mature Market Normalization

If demand remains strong, private credit is not immune to the growing demands of LPs. Investors are seeking greater transparency, stricter selection processes, and closer risk monitoring. Tikehau CMS notes that discipline has returned to structuring: better-controlled debt/EBITDA ratios, reintroduced covenants, and strengthened documentation. This development is beneficial as it reduces systemic risk and ensures that the high returns observed in 2025-2026 are not the result of excessive risk-taking.

In this landscape, players capable of combining proprietary sourcing, sector expertise, and close relationships with company executives are the best positioned. European private credit is entering a more mature phase, less spectacular than the expansion years, but more robust and institutional.

For wealth investors, one conclusion is clear: in a well-constructed portfolio, private credit is no longer just a diversification, but a backbone. And the figures presented by Tikehau CMS show that it will remain so.