A Guide to Private Credit Secondaries

Private credit secondaries can provide shorter-duration, diversified exposure to seasoned private loans while improving liquidity and potentially enhancing returns versus primary commitments.

• Global private credit AUM rose from $438 billion in 2014 to $1.745 trillion in 2023, with Moody’s Ratings projecting the asset class could reach $3 trillion by 2028.
• The secondary market gives investors liquidity by transferring fund interests, individual loans, or portfolios before maturity, while allowing new investors to bypass long fundraising periods and the J-curve.
• LP-led transactions have historically dominated, but GP-led deals are expected to represent 60% of 2025 volume versus a 20% historical average, often through continuation vehicles.
• Secondary purchases may benefit from NAV discounts, diversification across managers, geographies, vintages, obligors, and industries, and shorter expected lives; the guide cites typical target premiums of 200–400 basis points over equivalent primary strategies.
• Voya describes expected effective discounts of 6–12%, potential durations of 2–3 years, and an approximate 2–4% IRR uplift from discounts, while warning that credit, interest-rate, valuation, and execution risks remain material.

Takeaway: Private credit secondaries may offer attractive risk-adjusted exposure and faster cash-flow generation than primary strategies, but success depends on sourcing, detailed underwriting, pricing transparency, GP consent, and selectivity as competition increases.