Davis Polk partner and Finance practice head Jason Kyrwood and partners Zachary Frimet and Ruben Henriquez were featured in Private Debt Investor speaking about the future of private credit.  

Discussing what was driving the growth of private credit, Jason said, “For several years, private credit was the only viable source of capital for financing acquisitions or refinancings.”

“The other driver of growth for private credit has been the attractive risk/return profile of private debt, which is typically first lien and earns higher returns than are available on the syndicated market,” he added.

When asked if the size of direct lending transactions can continue to scale, Ruben noted, “The sky is the limit. At this point, anybody that said there was a limit to transaction size for this market in the past has been proven wrong, and we will continue to see larger and larger checks cut by direct lenders to support massive deals.”

Speaking about private credit strategies that are currently growing, Zachary said, “By and large, LPs are now comfortable allocating to private debt and are increasingly looking to invest in more comprehensive alternative capital products. That means they are diversifying private debt allocations to expand beyond traditional senior secured debt to include higher-yielding investments, such as opportunistic credit, or more flexible solutions like hybrid capital and financing structures that include elements of both debt and equity.”

Jason added, “In addition, there is increasing focus on geographic diversification, particularly in Europe. Private credit funds are also actively looking to expand their product offerings and investments into fields traditionally dominated by commercial banks, including investment grade credit, real estate and infrastructure. The growth potential of these strategies is enormous.”

Discussing how private credit managers can differentiate themselves, Ruben noted, “Many managers are focused on product offering as a point of differentiation, but relationships continue to be a key differentiator for firms. Players that have been in the market for a long time will likely lean on those historical ties as new entrants enter the market. But if these new entrants are able to offer better terms or more attractive products, we may see some of these relationships get tested.”

“Davis Polk & Wardwell: The sky is the limit for private credit,” Private Debt Investor (November 3, 2025) 

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