2026 Debtwire Private Credit Forum: Areas to watch for market participants

On June 3, 2026, DLA Piper participated in the Debtwire Private Credit Forum in New York, one of the industry’s premier events that brings together institutional investors, fund managers, direct lenders, and other private credit market participants. The forum featured leading voices from across the private credit ecosystem to discuss the state of the market, emerging risks, and opportunities arising in a rapidly evolving landscape.

At the forum, DLA Piper Partner Ranesh Ramanathan (New York) from the firm’s Capital Solutions team moderated a fireside chat on the growth of retail and semi-liquid private credit funds, which has attracted considerable attention from allocators and regulators alike as private credit continues its expansion beyond traditional institutional channels.

Across the event, speakers and panelists highlighted the following key areas to watch for market participants:

• Transparency, valuation governance, and investor communications.


• The shift from deployment volume to credit quality and value creation.


• Documentation discipline around liability management exercises (LMEs) protections; earnings before interest, taxes, depreciation, and amortization (EBITDA) definitions; and documentation risk controls.


• Preparing for macro uncertainty and approaching maturities.


• Product expansion, secondary-market constraints, and perception risk.

Below, we discuss these areas and provide key takeaways on their practical implications for lenders, borrowers, and other private credit market participants.

1. Transparency is key

Transparency in building and maintaining investor confidence was a central theme throughout the forum. Private credit is inherently illiquid, and market participants broadly acknowledged that the illiquidity premium remains justified so long as managers set clear expectations with limited partners regarding capital access, return timing, and portfolio composition. Investors are increasingly expecting true third-party valuation and consistency in marks, viewing these as non-negotiable elements of sound portfolio governance.

Panelists noted that the Investment Company Act of 1940 creates disclosure limitations around certain fund metrics, which can incentivize managers to “window dress” metrics that they are permitted to make public, for example, by lowering stated interest rates rather than converting to payment-in-kind (PIK) or by maintaining zombie debt on the books rather than converting to equity. Forum participants stressed that managers must be willing to take decisive portfolio actions even when doing so may not serve their short-term interests.

Key takeaway: For portfolio managers, the practical issue is not only ensuring that valuations are justified, but managing investor expectations proactively through disciplined, candid communication about liquidity, return timing, asset performance, and the reasons for any changes in valuation or portfolio strategy, particularly where regulatory constraints limit reporting.

2. Transition from volume to value

The private credit market has entered a new phase characterized by a hard pivot in capital flows. Retail outflows, a slower deal environment, fewer leveraged buyouts, and lower commitment amounts have collectively transformed the competitive dynamics of the market. Large transactions are increasingly difficult to syndicate, and participants observed that, in a meaningful reversal from the dynamics of recent years, the “last dollar in” now commands more negotiating leverage than the “first dollar in.”

In this environment, managers must remain disciplined and resist the temptation to let deployment pressure drive credit decisions. Panelists emphasized the importance of compensation structures and investment committee processes that reinforce credit discipline rather than reward volume. The transition from a deployment-driven market to one focused on credit quality and value creation will separate the strongest managers from the rest of the field.

Key takeaway: Lenders can use the current market reset to tighten internal credit discipline before the next deployment cycle accelerates, including by showing downside recovery analysis, exit liquidity assumptions, hold-size sensitivity, syndication risk, and the economics or covenant protections that justify committing the last dollars of capital. Borrowers can expect more selective credit committees and may need to come to market with revised leverage expectations, a clear use of proceeds, and a financing plan that does not depend on every lender stretching to the same endpoint.

3. Documentation trends

Documentation remained a focal point of discussion, with lenders acknowledging that sponsors continue to push aggressively on leverage, pricing, and structural flexibility. Forum participants emphasized that lenders must be willing to walk away from transactions that do not appropriately compensate for risk.

The shift in capital flows described above has rebalanced the market more evenly heading into 2026, providing lenders with renewed leverage at the negotiating table. A particular area of focus has been the closing of loopholes that enable LMEs. Panelists stressed that credit risk must be tied to document risk and that EBITDA definitions remain critical, so that loose terms and uncapped addbacks do not render leverage ratios throughout the loan agreement meaningless in practice.

Key takeaway: For lenders, the legal work is to convert the credit thesis into enforceable documentary controls by testing whether EBITDA addbacks, basket capacity, unrestricted subsidiary provisions, collateral-transfer mechanics, non-pro rata protections, and priming-debt restrictions still protect the lender in a downside case. Sponsors will need to weigh flexibility that is genuinely needed to operate the business against flexibility that may increase execution friction, pricing, or lender resistance because it reads as optionality for future liability management transactions.

4. Distressed credit management could drive manager dispersion

Looking ahead, macro uncertainty – including geopolitical risk, the evolving impact of artificial intelligence (AI), and the approaching 2028 maturity wall – could exert pressure on capital structures. Panelists observed that 1) how a manager handles distress signals the quality of its portfolio management to limited partners and 2) the private credit market has, to date, operated in a relatively benign credit environment. Stress testing has not yet occurred at scale, and the coming period will reveal which managers have built robust workout capabilities and which have not.

Industry specialization was identified as a key driver of higher returns, and participants noted that defaults in private credit do not define performance in the way they do in broadly syndicated loan (BSL) markets. Direct lenders are more equipped to own, operate, grow, and ultimately sell a distressed business, which is a fundamentally different strategy than passive mark-to-market loss recognition.

Key takeaway: Lenders can map consent thresholds, collateral control points, intercreditor constraints, amendment leverage, sponsor support assumptions, and potential steering-group dynamics before a default narrows optionality. Sponsors and borrowers facing distress can engage early with a credible liquidity forecast, business stabilization plan, and ask that is calibrated to the consent mechanics and lender constituencies that will actually determine the outcome.

5. Expansion of asset classes

The forum devoted significant attention to the expansion of private credit into adjacent asset classes. Retail investors remain under-penetrated in alternative products, representing a substantial source of future capital formation. Asset-backed lending (ABL) was highlighted as an under-allocated segment that requires deep expertise but offers attractive returns where underlying asset quality is strong. High rates and regional bank retrenchment have driven significant growth in this space in the private credit market.

Investment-grade direct lending is also a growing segment, offering a yield premium over public markets and bespoke solutions for borrowers. Capital solutions and opportunistic credit strategies – flexible, solution-oriented approaches targeting complex and under-served market segments – were discussed extensively. These strategies sit at the intersection of direct lending and control private equity, often involving equity or hybrid instruments and convertible preferred securities. Panelists noted that capital solutions are attractive in both strong and weak markets (a “barbell effect”) and are particularly well-positioned to address broken capital structures rather than broken credit cycles.

Key takeaway: Expanding into adjacent products involves more than simply importing a middle-market direct lending template: ABL requires borrowing base, dominion, audit, and field examination discipline; investment-grade direct lending requires covenant calibration for lower-default but higher-scale exposures; and capital solutions require careful attention to control rights, intercreditor position, exit paths, and hybrid-instrument economics. For borrowers, choosing a product that does not match their asset base and business plan can create unnecessary reporting burdens, collateral constraints, or control-right friction over the life of the financing.

6. Secondary trading of private credit

A secondary market for private credit is emerging, but it remains limited. Private equity sponsors retain significant control over who can hold their portfolio companies’ debt because most trades require sponsor consent. For that reason, broader secondary activity is unlikely to develop unless sponsors actively support it, and many prefer private credit over the BSL market in part because reduced trading creates less complexity.

On the buy side, limited information remains a key constraint. Buyers need sufficient familiarity with both the borrower and the sponsor before entering a trade. At the same time, sellers often prefer to transact quietly.

When credits become distressed, market participants are increasingly turning away from secondary sales to distressed debt investors and instead pursuing equity or hybrid solutions through capital solutions teams.

Key takeaway: Sponsors and lenders choose to be in the private credit market with the expectation of originating lenders holding the debt for the full seven-year term. A secondary market is likely to remain highly relationship-driven and concentrated among a small group of known participants.

7. Navigating a negative private credit news cycle

The forum included candid discussions of the current media environment surrounding private credit. Participants acknowledged that the negative news cycle is largely self-reinforcing: headlines are disproportionate to actual credit deterioration, and retail redemptions and defaults are normalizing rather than reaching elevated levels relative to historical norms. However, perception risk is real. If market confidence erodes, refinancing activity could stall even for non-distressed borrowers.

Panelists emphasized that private credit is not highly leveraged as an asset class, distinguishing current conditions from those preceding the 2008 financial crisis. Software exposure in direct lending portfolios was noted as overstated in media coverage, and while AI risk is being actively discussed, it has not yet materially affected portfolio underwriting. The consensus was that disciplined communication with investors and measured public engagement will be critical to maintaining confidence through the current cycle.

Key takeaway: The headlines over challenges in the private credit market are overblown but have some basis in truth. As the market matures, portfolio managers will distinguish themselves if they successfully navigate distress scenarios and liquidity. Borrowers can prepare a data-backed refinancing and performance narrative that anticipates lender concerns around leverage, liquidity, software or AI exposure, and covenant headroom before negative headlines or market volatility shape the story for them.

For more information, please contact the authors.