Key Takeaways
59% of global respondents are currently using asset-backed securities (ABS) and other structured products.
- PE firms are using various debt instruments, with Asia-Pacific firms favoring ABS and senior debt, EMEA firms using NAV facilities, and North American firms preferring first lien and senior debt.
- Many plan to increase their use of junior debt and ABS, highlighting the ongoing appeal of private credit solutions despite potential regulatory and market changes.
PE firms are continuing to avail themselves of a broad range of debt instruments. Junior debt, senior debt, NAV facilities and asset-backed securities (ABS) are all commonly held by respondents – though there are some nuances by region.
For example, firms based in Asia-Pacific are more likely to say they use ABS and other structured products than their counterparts in the EMEA region and in North America, respectively. They are also more likely than their international counterparts to hold first lien or senior debt. Firms based in the EMEA region are the most likely to be using NAV facilities.
Looking ahead, many PE firms are clearly expecting to continue to work closely with providers – and to do so across a variety of debt products. In particular, 58% of PE firms taking part in this research say they will use junior debt facilities more frequently over the next 12 months; 47% expect to make more use of the ABS market. Again, Asia-Pacific-based firms are particularly likely to explore this latter solution.
Elsewhere, it is notable that 49% of EMEA-based PE firms are expecting to increase their use of NAV facilities. Among North American firms, meanwhile, 40% anticipate increased use of first lien and senior debt loans. All of which suggests that the wide range of solutions that private credit providers can offer will continue to appeal to their peers in the PE industry. Further regulatory scrutiny of private credit might skew this picture over time – as might a decline in availability if interest rates continue to fall – but significant numbers of firms believe private credit offers value in current market conditions.
“Private credit has shown that it is able to lend at scale across sectors, with multiple product ranges providing flexibility of solutions to particular transactions and very often with single counterparty execution risk,” says David Miles, co-head of global leveraged finance, corporate and securities. “Those features, in a market where, at times, other financing solutions have not been as available due to broader macroeconomic conditions or other broader restrictions, has enabled private credit to continue to grow its share of the lending market space in many geographies.”
Footnotes
The preceding article is an excerpt from the 2025 Global Private Equity Outlook report, an annual publication that uses qualitative and quantitative findings to look at current PE industry trends and views on where the market is heading in 2025.
