Private Credit Pulse – Q2 2026

Welcome to the Q2 2026 edition of the Private Credit Pulse, DLA Piper’s quarterly newsletter offering strategic perspectives on developments shaping the private credit and fund finance markets.

This quarter, we co-hosted the second annual Beyond the Balance Sheet: The Future of Private Credit and Fund Finance Summit with Opal Group, bringing together leaders across the private credit, fund finance, and structured finance sectors. The discussions – which covered collateralized fund obligations (CFOs) and rated note feeder funds, net asset value (NAV) financing as a portfolio strategy, the future of direct lending, and music royalty securitizations – reflected a market in which traditional distinctions are becoming less pronounced and structures once considered niche are seeing broader adoption. Recordings and key takeaways are now available. We also launched Fund Finance Unlocked, a new fireside chat series pairing lawyers from DLA Piper’s Fund Finance team with industry participants to discuss the structuring considerations affecting fund and general partner financing.

In this issue, we share takeaways from the 2026 Debtwire Private Credit Forum, the DealCatalyst US Private Credit Industry Conference on Direct Lending, and the 10th Annual European Fund Finance Symposium in London – exploring the shift from deployment volume to credit quality, the rise of continuation vehicles and rated structures, and increased regulatory scrutiny of private capital. We also discuss agency roles in credit facilities across the English and United States (US) markets, and our 2026 International Debt Finance Intelligence Report tracks how lenders and sponsors are approaching risk, structure, and pricing. Throughout this issue, we highlight client alerts, podcasts, and webinars that examine how technology and artificial intelligence (AI) are being applied across private credit, fund finance, and secured lending.

Whether you’re a fund sponsor, lender, or investor, we hope these insights help you navigate what’s next.

Market updates at a glance

• Institutional fundraising remained resilient: North American direct lending funds focused on institutional investors raised at least $16 billion in Q2 2026, the second-strongest quarter in four years for closed-end direct lending fundraising.
  
  
• Private credit issuance declined: US-focused direct lending issuance fell to $44.76 billion in the three months ended May 2026, down approximately 40 percent from Q1’s $74.56 billion, according to Reuters, citing PitchBook LCD data.
  
  
• Sponsor-backed and leveraged buyout (LBO)-related direct lending also declined: Reuters, citing PitchBook LCD, reported that lending to private equity-backed borrowers fell nearly 37 percent, while financing tied to LBOs declined about 34 percent in the same three-month period that ended in May 2026.
  
  
• Managers reported expectations of increased allocations: In PwC’s Global Private Credit Survey 2026, more than 80 percent of credit portfolio managers said they expect increased allocations over the next 12 months, while most anticipate flat or lower returns amid greater competition.
  
  
• Market conditions turned more lender-friendly in Q2 2026: In a PitchBook LCD report, lenders described a market reset taking shape – with spreads widening, leverage pulling back, and terms improving. On standard deals, spreads moved out roughly 25–50 basis points from late-2025 levels, and a small sample of recent buyouts priced around S+509, up from S+474 in Q1 2026.
  
  
• Fund finance surpassed $1 trillion: Reuters, citing Moody’s, reported that the fund finance market surpassed $1 trillion in 2026, driven by private credit growth and increasing demand for fund-level liquidity solutions.
  
  
• Credit secondaries growth projections remained strong: Secondaries Investor, citing a Carlyle AlpInvest white paper, projected credit secondaries volume could exceed $80 billion annually by 2030, with an estimated $20 billion of credit secondaries dry powder at the start of 2026.
  
  
• Healthcare moved ahead of technology in direct lending deployment: Healthcare represented 22 percent of direct lending issuance year-to-date through March 2026, up from 18 percent in 2025, and displaced technology as the largest sector for direct lending deployment, according to PitchBook LCD.
  
  
• Research suggests data center financing is emerging as a major private markets opportunity: Goldman Sachs Research estimated that hyperscalers will spend approximately $5.3 trillion on AI and data centers from 2025 through 2030, creating demand for financing across public debt, private credit, infrastructure, and real estate markets. 

Our latest insights

• Recording and insights available. DLA Piper’s second annual Beyond the Balance Sheet: The Future of Private Credit and Fund Finance Summit, co-hosted with Opal Group, explored developments shaping the private credit, fund finance, and structured finance markets. Topics included private equity NAV financings, evolving rated note feeder fund structures, geopolitical influences on investment strategy, developments in fund finance products, and growing investor interest in music royalties and asset-backed securities. Access the recording and key takeaways here.
  
  
• 2026 Debtwire Private Credit Forum: Areas to watch for market participants. Read our key takeaways from the 2026 Debtwire Private Credit Forum, which include a growing focus on transparency and valuation governance, a shift from deployment volume to credit quality and value creation, evolving documentation and liability management protections, increased attention to distressed credit management and workout preparedness, expansion into new asset classes, and the emergence of a relationship-driven secondary market for private credit.
  
  
• Recording available: Fund Finance Unlocked – The role of AI in fund finance. Katie McShane, DLA Piper Partner and Head of East Coast Fund Finance, moderated a discussion with MUFG and Natixis on how banks and lenders are deploying AI in fund finance to streamline deal workflows and enhance risk assessment. They also addressed practical considerations for responsible adoption across the financial services industry. Access the recording here.
  
  
• 2026 International Debt Finance Intelligence Report. As financing conditions continue to evolve, DLA Piper’s 2026 International Debt Finance Intelligence Report provides a snapshot of how lenders and sponsors are approaching risk, structure, and pricing across today’s debt markets.
  
  
• Agency roles in credit facilities: A comparison of the English and US markets. This alert explores continuation and amendment considerations that may affect perfection and priority, including debtor name changes and other common updates.
  
  
• The evolution of fund finance: NAV lending, CFOs, and the rise of rated structures. Drawing insights from the DealCatalyst US Private Credit Industry Conference on Direct Lending, this alert examines key developments in NAV lending, CFOs, rated structures, and the evolving legal and structural considerations shaping the fund finance market.
  
  
• How technology and AI are transforming lending and secured finance. DLA Piper contributed to the International Comparative Legal Guide – Lending & Secured Finance 2026, which examines how technology and AI are reshaping lending and secured finance from the perspective of legal practitioners, including applications across the credit lifecycle and associated regulatory considerations.
  
  
• Recording available: The modern AI stack for private credit – Data, decisions, and scale. Matt Schwartz, DLA Piper Partner, US Finance Lead, Global Finance Co-Lead, and Co-Head of Private Credit, joined F2, Carta, and Armentum Partners for a webinar discussing how private credit funds are implementing AI in their daily operations, including opportunities and challenges associated with AI adoption and the ways in which data, operations, and technology are converging across the private credit ecosystem. Access the recording here.
  
  
• “What’s going on under the hood in private credit?” Matt Schwartz joined the Modern Capital podcast for a conversation on market fundamentals, risk, and factors influencing developments in the private credit market.
  
  
• Key takeaways from the 10th Annual European Fund Finance Symposium. Read our key takeaways from the Fund Finance Association’s 10th Annual European Symposium in London, including fundraising and liquidity challenges across private markets; the growing importance of distributed to paid-in capital and continuation vehicles; increasing adoption of NAV facilities, rated note feeder funds, and CFOs; evolving fundraising dynamics; and heightened regulatory scrutiny of private capital structures.

Upcoming events

Connect with our team at the following conferences and events:

• August 5, 2026: Fund Finance Unlocked fireside chat series – “The evolution of the treatment of rated note feeders in sublines,” featuring Jonny Byrne-Leitch, DLA Piper Of Counsel | Click here to register
  
  
• September 24, 2026: The 2026 Asset Based Finance Conference, New York | Panel: “The growth of retail and semi-liquid private credit funds,” moderated by Claire L. Hall, DLA Piper Partner and Co-Head of Structured Finance
  
  
• October 7, 2026: Credit at the Crossroads: Private Credit and the Next Wave of Capital Deployment Summit, hosted by DLA Piper and Octus | Click here to register
  
  
• October 14, 2026: Fund Finance Unlocked fireside chat series – “Recourse-light structures for NAV facilities,” featuring Ryan J. Moreno, DLA Piper Partner, Co-Head of Private Credit and Fund Finance | Click here to register
  
  
• October 15–16, 2026: Fund Finance West, Las Vegas | Panel: “Tech in private credit: From origination to portfolio monitoring,” moderated by Shana Ramirez, DLA Piper Partner and Head of West Coast Fund Finance
  
  
• October 19–20, 2026: Private Credit Connect: East, Miami | Panel: “Sponsor solutions: Solving private equity’s portfolio funding demands,” moderated by Ryan J. Moreno