Private credit fundraising hits record $129bn despite 28% decline in lending

Direct lending funds raised a record $129.15bn during the first nine months of 2026, even as lending activity slowed and borrowers increasingly refinanced through syndicated loan markets, according to a report by Reuters.

The fundraising total represents a 35% increase year on year and the highest nine-month figure recorded by Preqin since its data series began in 2016.

However, estimated direct lending volumes declined 28% year on year during the third quarter to $49.77bn, according to PitchBook/LCD, widening the gap between capital raised and new lending opportunities.

The imbalance is increasing pressure on private credit managers to deploy capital, potentially resulting in greater competition over loan pricing, leverage levels and covenant protections.

Sunaina Sinha Haldea, global head of private capital advisory at Raymond James, attributed the divergence to a cyclical shortage of attractively priced transactions and increased competition from syndicated loan markets, rather than a structural decline in borrower demand.

The shift is also reflected in refinancing activity. During the third quarter, approximately $16.39bn of direct lending loans were refinanced through broadly syndicated markets, compared with $2.60bn of syndicated loans moving into direct lending.

This reverses the pattern seen in 2022 and 2023, when volatile public lending markets encouraged borrowers to seek financing from private credit managers offering greater flexibility and execution certainty.

The trend could reportedly leave private credit portfolios with a greater proportion of borrowers unable to access syndicated financing, although smaller companies may continue to favour direct lenders because of their specific funding requirements.

The divergence between fundraising and deployment raises questions about whether managers will maintain underwriting standards or accept lower returns to invest accumulated capital.