Private credit has scaled into a core allocation for institutions and wealth channels alike, but the market’s defining feature remains structural friction: closed-end vehicles, multi-year lockups, and limited interim liquidity. Against that backdrop, private credit secondaries are emerging as a credible, increasingly institutionalised mechanism for liquidity and portfolio management - enabling LPs to rebalance exposures, supporting GP-led balance sheet solutions, and offering specialist buyers a route to deploy capital into seasoned portfolios.

The growth trajectory is becoming difficult to ignore. Jefferies projects that credit secondaries transaction volume will rise from roughly $6 billion in 2023 to $17+ billion in 2025, implying a 70%+ CAGR over the period. In parallel, Evercore’s 1H25 market survey indicates that 65% of respondents expect to raise additional dedicated credit secondaries capital over the next 12 months, suggesting that buyer capacity and institutional focus are expanding alongside deal flow.

Several structural drivers explain why this market is accelerating now. First, the sheer growth of primary private credit AUM has created the conditions for a secondary ecosystem: as the asset base expands, so too does the stock of mature portfolios and fund interests capable of being traded or recapitalised. Second, secondaries have become a more active portfolio construction tool for LPs, particularly when pacing is disrupted, distributions are slower than expected, or concentration and vintage exposures need to be adjusted. Third, GPs have stronger incentives to adopt structured liquidity solutions - continuation vehicles, portfolio sales, and tender mechanisms - that allow them to provide optionality to existing investors while preserving control of attractive assets and maintaining continuity of management.

For buyers, the proposition is not a simplistic “buy distressed credit at a discount” narrative. In many cases, the market is liquidity-driven and structure-driven rather than credit-impairment-driven. Credit secondaries can offer the advantage of underwriting seasoned exposure, with observable borrower performance and portfolio characteristics, while also enabling faster deployment than primary origination pacing. Pricing is highly portfolio- and structure-dependent, but Evercore notes that senior secured direct lending continuation vehicles have often cleared in the mid-90s to par range of fair market value, illustrating that a meaningful share of the opportunity set is not dislocated but instead reflects the price of liquidity and complexity.

That said, this is not a market where returns come for free. Complexity is precisely where the work - and the opportunity - sits. Transfer mechanics, consent rights, and documentation can materially affect both timing and economics. The presence of fund-level leverage or NAV facilities can reshape risk/return profiles. And the dispersion between high-quality senior secured exposure and weaker, less liquid portfolios means that valuation discipline and real credit underwriting remain central. Moreover, even as the strategy grows, dedicated credit secondaries capital is still often described as a small share of the broader secondaries ecosystem, which can constrain depth in certain segments and compress the liquidity premium in the most sought-after deals.

The direction of travel, however, appears structurally supported. If projected transaction growth materialises and fundraising intentions translate into deployable capital, credit secondaries are likely to evolve from a niche liquidity outlet into a scaled, repeatable strategy - analogous to the maturation of private equity secondaries in the previous cycle. The strategic implication is that private credit is no longer only an origination business. It is increasingly a lifecycle management business, and secondaries are becoming one of the principal tools through which that lifecycle is managed - by LPs seeking liquidity and portfolio control, by GPs seeking flexibility, and by buyers seeking underwriteable exposure with efficient deployment.