Private Debt News Weekly Issue #70: Fundraising Freeze, Vintage Warnings, and Uncomfortable Truths
Record 23-month raises expose capital exhaustion while industry veterans openly question default statistics
Follow me on Twitter. Interested in sponsoring Private Debt News? Discounted rates available for early sponsors—get in touch here or via e-mail.
Private credit’s institutional funding engine is breaking down. According to PitchBook data, traditional fundraising now takes a record 23 months to close, up from under 12 months in 2021. Mid-tier and smaller managers are struggling past 25 months as institutional investors sit on trapped capital in aging funds with extended hold periods.
The timing coincides with unprecedented candor from industry leaders. According to HPS’s Matthieu Boulanger, default rates are “artificially low” and “not a good indicator anymore” given widespread liability management exercises. Oaktree’s Danielle Poli warned that “there’s going to be some problems from vintage deals that were done,” citing complicated covenants and acceptance of lower standards.
Yet capital concentration accelerates among winners. CVC just closed a €10.4 billion European direct lending fund, significantly exceeding its €6 billion target and demonstrating that top-tier managers can still raise aggressively while competitors struggle. According to PitchBook, top performers close in 14 months versus 25+ months for others.
The disconnect persists between warnings and deployment. Private credit firms are considering a £1.3 billion package for JTC’s take-private at 8x leverage and 475 basis points pricing, while Apollo engineers a $10 billion insurance structure to bypass traditional fundraising entirely. PIMCO’s president argues that recent “sloppy underwriting” will highlight private credit’s underwriting superiority going forward.
First Brands’ $10 billion bankruptcy provides context, though the situation primarily involved broadly syndicated loans. Private credit exposure of approximately $276 million represents a relatively small portion, but the 36 cents trading level on some debt illustrates recovery risk across credit markets.
Key Market Themes
1. Fundraising Timelines Reach Historic Highs
Traditional private credit fundraising now takes a record 23 months to close, marking the longest stretch since at least 2006, according to PitchBook’s H1 2025 report. Mid-tier and smaller managers face even longer timelines exceeding 25 months while top-quartile performers complete raises in just 14 months.
The slowdown stems from institutional investors locked into aging funds with extended hold periods as private equity dealmaking stalls, according to Hilary Wiek of PitchBook. According to the analysis, “most private market strategies have been extending hold periods, so they need to make fewer commitments.”
Insurance and retail investors are becoming critical funding sources as traditional institutional appetite wanes. According to Morningstar data, semi-liquid credit fund assets increased over 20% since year-end 2024 to reach $230 billion, while insurers deploy capital into structured vehicles seeking investment-grade ratings.
Capital Exhaustion
According to Monsur Hussain of Fitch Ratings, “when we ask where do we see the growth coming from, it’s from more allocations in terms of private wealth, from retail investors and from insurers.” The shift indicates institutional fundraising challenges are becoming structural rather than cyclical.
2. Industry Veterans Question Default Metrics
HPS’s Matthieu Boulanger stated that private credit default rates are “probably artificially low and not a good indicator anymore” during a Milken Institute panel in Singapore. According to Boulanger, the market has seen extensive liability management exercises over recent years, making traditional default metrics misleading.
According to HPS’s assessment, recovery rates will become the best indicator over time as liability management exercises and restructuring activity obscure actual credit performance. The comments echo growing industry concern about the gap between reported default rates and underlying credit quality.
Oaktree’s Danielle Poli separately warned that “there’s going to be some problems from vintage deals that were done,” though she noted no systemic risk exists given lenders aren’t lending to each other and leverage has been relatively contained, according to her Bloomberg TV interview.
Vintage Quality
According to Poli’s assessment, “covenants are getting more complicated” with “a need to deploy capital and an acceptance of lower standards.” The acknowledgment from established managers suggests widespread recognition that 2021-2022 vintage quality will face significant challenges.
3. Capital Concentration Accelerates Among Winners
CVC Capital Partners’ credit unit closed its fourth European direct lending fund at €10.4 billion, significantly exceeding the initial €6 billion target and surpassing its €6.3 billion predecessor from 2022. According to Andrew Davies, CVC Credit’s head, the fund already made over 30 investments including lending for KKR’s Immedica Pharma buyout and Bridgepoint’s Alpha FMC delisting.
The successful close contrasts sharply with broader fundraising challenges, positioning CVC among the largest European direct lending managers alongside Ares’s €17.1 billion raise announced earlier this year. According to Davies, “the European private credit market has developed significantly in recent years, driven by structural tailwinds.”
CVC Credit now manages approximately €48 billion across liquid and private credit strategies, with European operations including direct lending and capital solutions representing over €18 billion of that total, according to the firm’s disclosures.
Market Bifurcation
The successful mega-raise demonstrates capital concentration among top-tier managers while smaller competitors struggle with extended fundraising timelines. According to PitchBook data, top performers now close funds in 14 months versus 25+ months for mid-tier players, creating unprecedented performance divergence.
4. PIMCO Argues Underwriting Provides Edge
Christian Stracke, PIMCO’s president, argued that “sloppy underwriting” over recent years is now enabling the market to appreciate private credit’s ability to spend more time on due diligence, according to his Milken Institute panel comments in Singapore.
According to Stracke, difficulties emerging in direct lending including shadow default rates and payment-in-kind interest increases will generate “renewed interest in good underwriting.” Stracke predicted that “the vintage of what’s being deployed right now is going to be pretty strong.”
However, the optimistic assessment contrasts with warnings from HPS and Oaktree about vintage quality and artificially low default statistics. According to industry observers, PIMCO’s confidence in current underwriting may reflect its position as a later entrant able to be more selective.
Competitive Positioning
According to Stracke’s framework, private credit’s detailed underwriting capability differentiates it from broader credit markets. However, the argument assumes managers are actually deploying that capability rather than accepting lower standards to deploy capital under pressure.
5. JTC Take-Private Demonstrates Aggressive Terms
Private credit firms are considering a £1.3 billion debt package to finance a potential take-private of JTC Plc, the London-listed fund administration provider, according to people familiar with the matter. Suitors including Warburg Pincus and Permira are negotiating leverage of approximately 8x EBITDA of about £150 million.
According to market sources, the deal targets pricing of 475 basis points over Sonia, considered tight for private credit at such high leverage multiples. The transaction demonstrates continued appetite for large take-private financings despite broader market stress signals.
However, private credit faces increasing bank competition for large deals, having recently lost over $20 billion in M&A financing to Wall Street lenders, according to recent Bloomberg reporting. The competitive pressure may be driving aggressive pricing and leverage terms.
Deployment Pressure
The 8x leverage multiple on a financial services business facing regulatory and operational risks demonstrates either confidence in JTC’s stability or pressure to deploy capital. According to market participants, 475 basis points pricing at 8x leverage suggests spread compression despite elevated credit risk.
6. Apollo Engineers Insurance Funding Structure
Apollo Global Management is preparing to raise $10 billion from insurers using a rare structure after building approximately $5 billion through its Fox Hedge vehicle to sell debt against assets to annuity providers over the past year, according to market sources.
The innovative structure represents private credit’s evolution toward insurance-funded strategies as traditional institutional fundraising slows. According to industry observers, structured vehicles able to achieve investment-grade ratings are attracting significant insurer capital seeking yield advantages over public bonds.
However, the reliance on insurance capital introduces new risks including regulatory scrutiny and potential conflicts between insurance solvency requirements and private credit hold periods. According to rating agency warnings, insurance-funded structures may face stress if credit performance deteriorates.
Funding Innovation
According to John Anderson of Goodwin Procter, “we are seeing a proliferation in the ways that private credit is delivered to investors” with diversification potentially contributing to asset class growth. The Fox Hedge structure demonstrates how managers are engineering solutions to institutional fundraising challenges.
7. First Brands Illustrates Broader Credit Risks
First Brands Group’s bankruptcy with over $10 billion in liabilities primarily affected broadly syndicated loan investors, though private credit firms provided approximately $276 million in later-stage financing. According to court filings, Strategic Value Partners holds $100 million through Bryam Ridge LLC while Sagard arranged the original $250 million facility in April.
Some syndicated debt now trades at approximately 36 cents on the dollar with investors facing hundreds of millions in losses, according to market pricing. The private credit portion included covenants blocking new debt without lender consent, but a planned $6.2 billion Jefferies refinancing collapsed after investors demanded additional diligence.
According to people familiar with the situation, costs ballooned by approximately $220 million by August due to tariffs while entities tied to First Brands missed lease payments starting in May, swelling obligations to around $1.9 billion.
Recovery Challenges
According to court filings, private credit lenders wait alongside approximately 80 other creditors for recovery. While the situation primarily demonstrates broadly syndicated loan risks, the $276 million private credit exposure illustrates how later-stage rescue financing can leave lenders in vulnerable positions.
Deals of Note
CVC Direct Lending IV - €10.4B European fund significantly exceeds €6B target
JTC Take-Private - £1.3B private credit package at 8x leverage under consideration
Apollo Fox Hedge - $10B insurance funding vehicle using structured debt model
Wall Street M&A - $20B+ financing wins demonstrate bank competition pressure
Forward Outlook
Fundraising timelines continue extending for mid-tier and smaller managers
Capital concentration accelerates among top-tier performers
Default statistics face increasing scrutiny as artificially low metrics questioned
Insurance and retail capital becomes critical as institutional flows slow
Vintage quality warnings from established managers suggest coming credit stress
Leverage multiples remain aggressive despite market stress signals
Bank competition intensifies for large M&A financings at tighter pricing
Final Takeaway
Private credit’s institutional funding model is breaking. 23-month fundraising timelines versus 12 months in 2021 aren’t a blip, they’re structural. Institutional investors are trapped in aging funds and can’t commit new capital. The 14-month close for top performers versus 25+ months for others shows brutal market segmentation.
Industry veterans are done pretending everything is fine. According to HPS, default rates are “artificially low” and meaningless. According to Oaktree, vintage deals will have “problems.” These aren’t outsiders criticizing, these are established players acknowledging reality.
CVC’s €10.4 billion raise proves winners still win, but the fundraising data shows most managers are losing. Apollo’s $10 billion insurance structure and the $230 billion in semi-liquid retail funds demonstrate the industry engineering around institutional exhaustion rather than solving it.
Meanwhile, deployment pressure drives 8x leverage at 475 basis points for take-privates while PIMCO argues current underwriting will prove superior to past sloppiness. The contradiction is obvious: if past underwriting was sloppy, why trust current standards under more pressure?
The fundraising freeze exposes what growth masked: not everyone can raise, not all vintages will perform, and default statistics obscure rather than reveal credit quality. First Brands’ $10 billion bankruptcy was mostly syndicated, but the 36 cents trading level and $276 million private credit exposure illustrate recovery risk everywhere.