Private Debt News Weekly Issue #46: ETF Hype Fades, Retail Turns Cautious, and Asset-Based Lending Takes Over
Private credit flows stall, BDCs slide, and Coller breaks records as the market pivots to structure, liquidity, and secondaries.
The optimism around private credit's "next frontier" is being met with reality. This week, the market is seeing a full-spectrum recalibration: fundraising is slowing, ETFs are faltering, and investors are finally asking tough questions. With banks pulling back from syndication and retail enthusiasm cooling, private credit managers are pivoting hard into asset-based lending, opportunistic strategies, and secondaries.
The headlines say it all: PRIV, the first-ever private credit ETF, hasn’t seen a dollar of inflows in over a month. BDCs are trading near book—or worse. And while private credit still has dry powder, the capital deployment playbook is shifting from speed to selectivity.
Let’s unpack what really mattered this week.
Key Market Trends
1. State Street’s Private Credit ETF (PRIV) Stalls—Retail Momentum in Question
The launch of PRIV, the first ETF tied to private and public credit, was supposed to democratize the asset class. Instead, it’s become a cautionary tale.
No inflows since March 4. Assets stuck at $54.6 million.
SEC raised post-launch concerns over the fund’s name, valuation approach, and underlying liquidity.
The ETF holds mostly public bonds and MBS, with only ~3% in actual private credit.
Why it matters:
Investors are clearly skeptical. An ETF offering daily liquidity tied to illiquid loans was always going to face structural hurdles. PRIV’s flop may push the industry back toward interval funds and model portfolios, which offer a better liquidity-risk balance.
2. Fundraising Momentum Has Slowed to a Crawl
Private credit fundraising totaled $177 billion in 2024, down from $254 billion in 2021. Through March 27, 2025, less than $50 billion has been raised.
Institutional demand is plateauing.
Retail investors are hesitant, especially with fee-heavy and opaque structures.
Firms like KKR, Blackstone, Capital Group, and Apollo are shifting focus to customized retail vehicles with quarterly or semi-annual liquidity.
The takeaway:
The "retail wave" may still be coming, but not through ETFs. Instead, the next growth channel is likely to be interval funds, advised portfolios, and private market feeder structures.
3. BDCs Slide as Public Credit Markets Crack
Publicly traded BDCs—once a sentiment bellwether for private credit—have been hammered.
Since February highs:
FS KKR Capital (FSK) is down ~20%.
Blue Owl (OBDC) is off ~14%.
Oaktree (OCSL) and Goldman Sachs BDC (GSBD) down over 23%.
NAVs haven’t yet been marked, but spread widening suggests markdowns are inevitable.
What to watch:
Earnings season will be a reality check. Expect delayed markdowns, PIK creep, and increased provisioning for future losses.
4. Asset-Based Lending Is Becoming the New Core Strategy
As direct lending becomes more crowded—and more risky—firms are pivoting toward asset-based credit.
Who’s doing it:
Crayhill Capital closed a $1.3B fund focused on deals backed by receivables, leases, and hard assets. Already 75% deployed.
Fortress Investment Group is targeting $1.5B for its latest asset-backed credit strategy.
PGIM just hired a former Blackstone exec to build a global ABL platform.
Why it matters:
Private credit is moving toward structure-first deals: collateralized, cash-flow stable, and less correlated to sponsor behavior.
5. Secondaries Are Becoming a Core Liquidity Tool
Coller Capital closed a landmark $1.6B transaction, acquiring LP interests in 44 senior lending funds—across over 3,000 loans.
This marks the largest LP-led credit secondaries deal to date.
The transaction signals rising demand for exit options in locked-up vehicles.
The broader trend:
As more LPs seek optionality and capital constraints tighten, secondary markets will become essential for liquidity and portfolio management.
Notable Deals & Pipeline Activity
Blackstone and Blue Owl teamed up to fund $600M for BayPine’s acquisition of CenExel Clinical Research.
Barclays and Antares are shopping a $500M loan for Validity Inc. to private credit after failing in public syndication.
Asia Pulp & Paper is seeking $2B to acquire Kimberly-Clark’s tissue business.
Sculptor raised $900M for an opportunistic fund already returning 15%+ IRR since 2022.
Bayview and Willow Tree exploring minority stake sales to support capital expansion.
Savara secured up to $200M from Hercules Capital for FDA-focused drug development.
Forward Outlook
1. Interval Funds, Not ETFs, Will Drive Retail Credit Growth
Expect fewer launches like PRIV and more customized vehicles with controlled liquidity.
Firms like Blackstone and Apollo will lead distribution via RIAs, wirehouses, and retirement accounts.
2. Asset-Based Finance Will Overtake Traditional Direct Lending in Volume
The narrative is shifting from cash flow lending to contracted cash flow structures.
Expect more home equity, data center, digital infra, and lease-backed facilities.
3. Secondaries and NAV Loans Will Become Core Portfolio Tools
LPs and managers need liquidity.
NAV loans, GP stakes, and credit continuation funds will scale dramatically.
4. Expect More Internal Marks and PIK Creep
Managers will tweak earnings, defer cash payments, and lean on PIK toggles to manage through volatility.
Earnings calls over the next month will show who’s truly managing risk.
5. Opportunistic Credit Funds Will Take Share From Plain-Vanilla Lending
More funds like Sculptor’s Tactical Credit will emerge to seize dislocated risk.
Performance will drive capital flow away from commoditized lending desks.
Final Takeaway
The cracks are visible. Retail is cautious. BDCs are bleeding. And while deal activity is holding, the structure, pricing, and investor base for private credit is changing fast.
The next cycle won’t be won on scale—it will be won on discipline, structure, and adaptability. Stay sharp.
Stay tuned with Private Debt News Weekly—your trusted lens on credit’s fast-moving reset.