Davis Polk partner and Finance practice co-head Jason Kyrwood and partners Zachary Frimet and Nick Palumbo were featured in Private Debt Investor speaking about the next phase of private credit’s expansion, which will come from a wider array of strategies including capital deployment and fundraising diversification. 

Speaking about the current state of the private credit market, Jason said, “Today, private credit is an established and indispensable part of the financial ecosystem, roughly equal in size to the Term Loan B syndicated market and the high-yield debt market. Competition between these markets – and between funds – is fierce both for deployment opportunities and for fundraising dollars. I expect that will drive change in the space.”

Noting the rise in hybrid and junior capital in private credit over the past year, Zachary explained, “Senior secured direct lending today is – and will continue to be – a very important component of the private credit market, but increased competition for top-tier assets from the broadly syndicated market and investor appetite have led to a significant increase in fundraising and deployment into higher-yielding strategies. These include opportunistic credit, distressed debt, and junior and hybrid capital (investments that are in the form of equity or have equity-like features).”

Discussing trends he’s seen in term negotiations, Nick noted, “[W]ith a large group of private credit providers sitting on pools of capital that need to be deployed, we see a hyper-competitive environment with respect to terms, including pressure on pricing.”

“There continues to be a focus on negotiating protections against liability management exercises, but outside of that there is a general move towards more borrower-friendly terms for top-tier credits,” he added.

“Deployment and fundraising diversification drive growth,” Private Debt Investor (March 1, 2026)

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