Private credit funding into emerging and non-US markets surged in 2025, surpassing previous records as banks pull back and investors seek higher yields amid market volatility, prompting product innovation and raising concerns over risks and regulation.
Lending by private credit firms into emerging and other non‑US markets is accelerating sharply, with capital deployed in the first three quarters of 2025 reaching $18 billion , a new annual pace that tops the previous record set in 2022, according to a report from the Global Private Capital Association (GPCA). The GPCA said fund managers have raised $54 billion for markets‑focused private credit funds since 2021 and that its members now manage more than $2 trillion across Asia, Latin America, Africa, Central and Eastern Europe, and the Middle East.
The GPCA report frames the shift as part cyclical and part structural. “Since 2022, we have gone from base rates at the zero bound – with public markets priced to perfection from the standpoint of borrowers – to now an increase in base rates, volatility and dislocation in the public debt markets,” said Gustavo Ferraro, partner and head of capital solutions at Gramercy Funds, in comments accompanying the report. Those conditions, the report suggests, have enlarged the opportunity set for private lenders as banks retrench from higher‑risk lending and public markets become more volatile.
Regional patterns are pronounced: Latin America and Asia accounted for the lion’s share of disclosed deal value since 2021, representing 45% and 38% respectively of capital deployed, and financial services , including fintech , made up about 24% of deal value. “We see fintech platforms across emerging markets increasingly financing their growth with debt,” said Ryan Millikan of Kirkoswald Capital Management. He added that many opportunities fall below the typical $100m–$200m threshold for global investment banks, opening space for asset‑backed lending to non‑bank financial services, with Latin America singled out as “the most fertile ground,” and rising interest in emerging Europe and the Middle East.
Major managers and new product structures are reinforcing the trend. Reuters reporting shows large asset managers such as PIMCO and Gramercy are ramping up emerging‑market private lending, with PIMCO alone at nearly $6 billion of EM government and sovereign‑linked private lending in 2025 and planning further growth. PIMCO’s transactions , which include private bonds, loans and purchases of discounted public paper , have delivered yields materially above comparable public debt and often include stronger covenants, the firm told Reuters. At the same time, private equity and asset managers are allocating more capital to credit strategies: Preqin‑style industry forecasts and firms’ own disclosures point to private credit becoming a far larger share of the alternative‑asset landscape through the rest of the decade.
The move into emerging markets is mirrored by product innovation and broader distribution. KKR and Capital Group have launched blended funds that allocate roughly 60% to public fixed income and 40% to private credit, with the stated aim of opening access to private credit for retail investors and lowering historical entry barriers. Industry strategists argue such vehicles respond to investor demand for yield and diversification as bank lending recedes.
Yet the rapid expansion is not without risk. Bank of America Global Research projects a modest easing of US private‑credit defaults as policy rates fall, but warned the sector remains “fragile” because of opaque lending practices and concentrated exposure to technology and services sectors vulnerable to disruption. Reuters coverage of industry commentary has recorded similar cautions: senior executives at major credit managers acknowledge pockets of “froth” as new capital chases deals and due diligence timelines shorten. Concerns include limited transparency, sparse regulatory oversight in some jurisdictions and the as‑yet untested mechanics of restructuring private credit exposures at scale in emerging markets.
Question marks also linger over systemic impact. While GPCA markets accounted for only about 4% of global private credit fundraising since 2008, the absolute sums and the entry of global managers and insurers are changing market dynamics: insurers and long‑duration investors are reported to be allocating to bespoke private loans and sovereign‑linked financings to seek higher yields and covenant protections. At the same time, asset managers are forging partnerships with banks to underwrite large infrastructure and real‑assets financings , for example, a $546 million package backing Colombia’s Conexión Norte that combined credit funds and traditional bank capital.
The expansion into emerging markets offers structural advantages that managers cite , lower leverage, shorter duration and higher gross yields, and a lower incidence of covenant‑lite structures than in US middle‑market and broadly syndicated loan markets , but it also raises governance and operational questions. Reuters reporting highlights that regulatory opacity and the complexity of restructurings could test the resilience of private‑credit players as portfolios grow and stress events occur.
For now, the market is clearly moving: fundraising, product innovation and high‑profile deals , from a $1.4 billion asset‑backed financing for Saudi BNPL firm Tamara to growing manager allocations into Asia and Latin America , point to private credit playing an expanded role in financing the real economy outside the United States. Industry data and manager statements indicate the shift is being driven by yield‑seeking investors, reduced bank willingness to hold certain credits, and the bespoke protections that private deals often provide. Whether that combination will deliver durable, well‑underwritten growth or amplify vulnerabilities exposed by recent failures in US private credit remains a central question for investors and regulators alike.
- https://alternativecreditinvestor.com/2025/12/10/private-credit-beyond-us-hits-18bn/ – Please view link – unable to able to access data
- https://www.reuters.com/business/finance/us-private-credit-defaults-ease-2026-fragility-persist-says-bofa-2025-12-09/ – Bank of America (BofA) Global Research projects that U.S. private credit defaults will decline slightly in 2026 to 4.5% from 5% in 2025 as the Federal Reserve lowers interest rates. This would provide some relief to a sector that has faced scrutiny following high-profile bankruptcies such as First Brands and Tricolor. Private credit loans, often tied to floating rates, benefit directly from rate cuts. However, BofA warns that the sector remains fragile due to opaque lending practices and its significant exposure to technology and service industries, which are susceptible to disruption from AI advancements.
- https://www.reuters.com/business/finance/kkr-capital-group-launch-funds-targeting-blend-private-public-credit-2025-04-29/ – KKR and Capital Group have jointly launched two new investment funds—Capital Group KKR Core Plus+ and Capital Group KKR Multi-Sector+—with the goal of expanding access to both public and private credit markets for retail investors. Each fund will allocate 60% of assets to public fixed income securities and the remaining 40% to private credit, a sector experiencing rapid growth as banks reduce participation in high-risk lending. Traditionally reserved for institutional investors, private credit offers portfolio diversification and reduced exposure to public market volatility. The funds aim to lower the investment barrier, with a minimum entry point of $1,000, making them more accessible to individual investors. KKR co-CEOs Joe Bae and Scott Nuttall emphasized their intention to democratize access to private markets. A Moody’s report earlier in the year predicted the private credit market could reach $3 trillion by 2028.
- https://www.reuters.com/markets/pimco-steps-up-private-lending-emerging-market-governments-2025-04-02/ – PIMCO, a leading asset manager, has significantly increased its private lending to emerging market (EM) governments, reaching nearly $6 billion in 2025 so far—approaching last year’s $8.5 billion total across 27 deals. This form of private credit is gaining traction among EM countries as it offers flexibility and discretion compared to public debt options. PIMCO targets countries with low investment-grade or high sub-investment-grade credit ratings and lends through private bonds, loans, or by purchasing discounted public bonds. The firm is securing attractive returns—up to 150 basis points more than comparable public investment-grade bonds and up to 300 basis points for high-quality high-yield debt. PIMCO also benefits from stronger covenants in private deals, giving it enhanced lender protections. Nations such as Panama, the Dominican Republic, Saudi Arabia, and Qatar have engaged with PIMCO for such financing, often to preserve optionality and avoid public market disruptions. Private lending remains a small portion of total debt for these nations, typically around 3%. Insurers, concerned about U.S. equity market volatility, are driving demand for these bespoke, higher-yield investments.
- https://www.reuters.com/business/finance/bain-capital-private-credit-executive-brushes-off-systemic-concerns-eyes-asia-2025-11-07/ – A senior executive at Bain Capital Private Credit, Jeffrey Hawkins, stated that there are no systemic risks in the global private credit market despite concerns following the collapses of U.S. firms First Brands and Tricolor. Hawkins acknowledged a “frothy” market due to new capital influx prompting quicker investments with potentially less diligence. However, he emphasized that long-term insurance investors do not pose increased risk, and that major issues typically arise from asset-liability mismatches rather than product quality. Bain, with $58 billion in credit assets under management, is increasingly focusing on Asia for growth, particularly in direct lending markets underserved by traditional banks. Hawkins labeled Asia as the most promising region for expansion compared to the U.S. and Europe. Bain is currently raising funds for Asia direct lending and its third Asia special situations fund, targeting markets such as Australia and India.
- https://www.reuters.com/business/finance/private-credit-cash-pivots-risky-west-emerging-markets-2025-10-07/ – The article highlights a significant shift in global finance as private credit increasingly moves from saturated and risky Western markets to emerging markets (EM), driven by investors’ desire for higher yields and uncorrelated returns. With traditional bank lending declining and developed market opportunities becoming more competitive and less rewarding, investors are turning to EM where projects, such as Angola’s new refinery and infrastructure in Kenya and Turkey, provide strong returns and actual control over assets. Major asset managers like PIMCO and Gramercy are ramping up EM private credit efforts, with PIMCO expecting a 30% increase in annual lending to $10 billion and Gramercy doubling its investment to $4.8 billion. These loans typically support large and mid-sized corporates and sovereign projects, offering more flexible, tailored financing options. A key draw is that EM companies are accustomed to political and economic instability, and offer better risk-adjusted yields than developed markets. While EM private credit is growing rapidly—with potential to add tens of billions in funding—concerns remain about regulatory opacity and how private credit will handle defaults and restructures, which remain largely untested at this scale.
- https://www.reuters.com/business/finance/private-credit-gains-ground-among-top-private-equity-managers-2025-11-13/ – Private credit is increasingly becoming a larger share of total assets under management for major private equity firms. The AUM of private credit assets is expected to nearly double to $4.504 trillion in 2030 from an estimated $2.280 trillion in 2025, according to a report by Preqin. Blackstone Inc.’s credit and insurance segment grew 18% to $375.50 billion in 2024 from $318.9 billion in 2023. As of the third quarter of 2025, this segment’s AUM stood at $432.30 billion. Credit and insurance grew to comprise 33% of the firm’s total AUM in 2024 from 31% in 2023. The firm’s private equity segment, on the other hand, comprised 31% of total AUM in 2024, up from 29% in 2023. “Private credit markets are expanding from their origins in non-investment-grade corporate credit and direct lending to become a key mechanism for financing the real economy, including commercial finance, consumer and residential finance, fund finance and of course, infrastructure,” Blackstone President and COO Jonathan Gray said during the company’s third-quarter earnings call on Oct.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
9
Notes:
The narrative is recent, dated December 10, 2025, and reports on private credit investments reaching $18 billion in 2025, surpassing the previous record of $16.2 billion set in 2022. This aligns with recent reports from the Global Private Capital Association (GPCA) highlighting significant growth in private credit investments in emerging markets. ([globalprivatecapital.org](https://www.globalprivatecapital.org/newsroom/private-credit-gears-up-for-biggest-year-in-emerging-markets/?utm_source=openai)) The report is based on a press release from the GPCA, which typically warrants a high freshness score.
Quotes check
Score:
8
Notes:
The narrative includes direct quotes from Gustavo Ferraro of Gramercy Funds and Ryan Millikan of Kirkoswald Capital Management. A search reveals that similar quotes from these individuals have appeared in earlier reports, indicating potential reuse of content. However, no exact matches were found for the specific wording used in this narrative, suggesting some originality.
Source reliability
Score:
7
Notes:
The narrative originates from Alternative Credit Investor, a publication that focuses on private credit markets. While it provides detailed information, the publication’s reputation and editorial standards are not widely known, which introduces some uncertainty regarding its reliability.
Plausability check
Score:
9
Notes:
The claims about the growth of private credit investments in emerging markets are plausible and supported by recent industry reports. The narrative provides specific figures and quotes that align with known data, and the language and tone are consistent with industry reporting.
Overall assessment
Verdict (FAIL, OPEN, PASS): OPEN
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The narrative presents recent and plausible information about the growth of private credit investments in emerging markets, supported by quotes from industry professionals. However, the source’s reliability is uncertain due to limited information about the publication’s reputation. Additionally, some content appears to be reused from earlier reports, which may affect the originality of the narrative. Given these factors, further verification from more established sources is recommended.