Credit Secondaries: The Private Markets Liquidity Tool Growing From $15B to $50B by 2030

TL;DR: Benzinga reported July 27 that Ares Management is attempting a $3.4 billion credit secondaries transaction — potentially the largest private credit secondary deal on record. The transaction reflects a market that grew from $3 billion annually in 2019 to $15 billion in 2024, with projections to exceed $50 billion by 2030. Most accredited investors have never heard of credit secondaries. That gap is closing.

What Credit Secondaries Are

A secondary transaction in private markets means buying an existing investor's position in a fund rather than investing directly into a new fund.

Credit secondaries apply that concept to private credit funds: direct lending funds, mezzanine funds, distressed credit funds, and other vehicles that make loans to businesses rather than taking equity stakes.

The seller is an LP who owns a stake in a private credit fund. That LP wants liquidity before the fund's natural maturity. The buyer purchases the LP's position, assuming their rights to future cash flows — both the interest income from the underlying loans and the return of principal at loan maturity.

This differs from equity secondaries in one critical way: private credit funds pay regular income. An LP interest in a direct lending fund receives quarterly or semi-annual distributions as borrowers pay interest. You're not waiting for an exit event five years away. Cash flows start immediately upon purchase.

The Market Growth Is Structural

The numbers tell a clear story.

According to Coller Capital's private credit research, credit secondary transaction volume reached roughly $3 billion in 2019. By 2024, that figure had grown to $15 billion : a five-fold increase in five years. First half 2026 volume has already exceeded $20 billion, tracking toward a $28 billion full-year figure. Projections from multiple secondary market advisors put the 2030 market above $50 billion annually.

What's driving that growth? Three forces working simultaneously.

Private credit maturation: Global private credit AUM exceeded $2.1 trillion by 2025, according to Preqin's 2025 report. As the asset class grows, the pool of LP interests available for secondary sale grows with it. More LP interests in existence means more secondary supply.

LP liquidity pressure: Insurance companies, pension funds, and endowments are under periodic pressure to rebalance portfolios, meet capital calls, or respond to regulatory changes. Credit fund lock-ups of 7-10 years create demand for early exit : which credit secondaries provide.

Market infrastructure development: Five years ago, the credit secondary market lacked the pricing standards, buyer depth, and operational infrastructure to execute large transactions efficiently. Today, dedicated credit secondary funds from Ares, Coller, Pantheon, HarbourVest, Goldman Sachs, and Blue Owl provide reliable buyer demand across deal sizes from $10 million to $3 billion+.

How Credit Secondaries Differ from Equity Secondaries

Investors familiar with private equity secondaries will recognize the structure but should understand the differences.

Factor	Credit Secondaries	Equity Secondaries
Underlying asset	Private loans and debt instruments	Equity stakes in companies
Return profile	Income-driven (8-12% yield, 10-15% net IRR)	Capital-appreciation-driven (15-25% net IRR)
Pricing vs. NAV	95-99% for quality positions	75-90% typical range
Duration	3-5 years average (loan maturities)	5-8 years average (exit events)
Cash flow timing	Immediate (regular interest distributions)	Backend-loaded (distributions on exit)
Volatility	Lower (contractual cash flows)	Higher (equity valuation uncertainty)

The income-first profile is credit secondaries' defining characteristic. When you buy an LP interest in a performing direct lending fund at 97 cents on the dollar, you're acquiring a stream of quarterly interest distributions plus return of principal at loan maturity. The 3% entry discount is a bonus on top of the underlying fund's stated yield.

The Recent Deals That Defined the Market

Three transactions in 2025-2026 illustrate the scale this market has reached.

Ares Management is attempting to sell $3.4 billion of LP stakes in Ares Capital Europe : potentially the largest private credit secondary ever. The buyer universe includes specialized secondary funds like Coller Capital, Pantheon, and HarbourVest who have raised capital specifically for transactions of this size.

Pantheon Ventures led a $3.2 billion continuation vehicle for Crescent Capital : a GP-led credit secondary where Crescent moved assets from a maturing fund into a new vehicle, giving LPs the choice to cash out or roll their exposure.

Benefit Street Partners closed a $2.3 billion credit continuation vehicle led by Coller Capital, following the same structure.

These deals aren't outliers. They're the new normal at the top of the market.

Pricing Mechanics: How Buyers Value These Positions

Credit secondary pricing depends primarily on loan quality, fund vintage, and remaining duration.

Senior secured loans in performing, well-covenanted portfolios trade close to NAV : typically 95-99 cents on the dollar. Buyers accept thin discounts because the underlying loans generate reliable income and carry low default risk. The entry discount exists because the seller needs liquidity; it doesn't reflect credit distress.

Older vintage funds (10+ years old), funds with concentrated sector exposure, or funds with meaningful PIK (payment-in-kind) or amendment-and-extend loan activity trade at steeper discounts : sometimes 75-85 cents. Buyers price in uncertainty about terminal cash flows and timeline to recovery.

Mezzanine and subordinated debt portfolios sit in the middle: higher underlying yields, but more credit risk and earlier loss absorption in default scenarios. Expect pricing of 80-90 cents for quality mezzanine books.

How Accredited Investors Access Credit Secondaries

You won't be bidding on Ares Capital Europe LP stakes directly. But you have several practical paths.

Dedicated credit secondary funds: Firms like Ares, Coller Capital, Pantheon, HarbourVest, and Goldman Sachs run institutional funds that specialize in buying credit secondary positions. Minimums start at $1 million for accredited investors, with most institutional mandates beginning at $5 million. These are 7-10 year lockup vehicles with management fees of 1-1.5% and carried interest of 10-15%. You're an LP in a fund that does the deal selection and execution.

Interval funds and evergreen vehicles: Some managers have created semi-liquid vehicles that hold credit secondary positions alongside primary credit exposure. These allow quarterly redemption windows (typically 5% of NAV per quarter), provide monthly or quarterly distributions, and accept minimum investments of $25,000-$100,000. Fee loads are higher, but liquidity terms are meaningfully better than fully illiquid fund structures.

Credit-focused fund-of-funds: Some platforms aggregate access across multiple credit secondary strategies. Expect higher total fee drag (layered management fees) but broader diversification across secondary managers and vintage years.

The Risks Worth Naming

Three risks matter for credit secondary investors.

Duration extension: Private credit borrowers in stress may negotiate loan amendments that push out maturity dates (amend-and-extend) or defer cash interest in favor of PIK additions. If the fund you've bought into has multiple borrowers extending their loans, your expected return timeline grows and the present value of future cash flows shrinks.

Fee drag compounding: You're paying fees on an investment that already carries primary-level fees. A credit secondary fund charging 1.5% management and 10% carry on top of an underlying fund that charges 1.5% management and 15% carry creates meaningful total fee drag on net returns. Always model the all-in fee impact before comparing credit secondary net returns to primary alternatives.

Credit quality heterogeneity: "Private credit secondaries" describes a range of risk profiles from high-quality senior secured performing loans to distressed positions in troubled funds. Quality varies enormously. A position in a top-quartile Ares or Golub direct lending fund is fundamentally different from a position in an unknown credit manager's fund that's trading at 80 cents because the portfolio has problems. Do not assume "credit secondaries" implies uniform credit quality.

Frequently Asked Questions

What return premium do credit secondaries offer over primary credit funds?

Historically, dedicated credit secondary funds have generated net IRRs of 10-15%, representing a 200-400 basis point premium over comparable primary direct lending fund investments (which typically target 8-11% net IRRs). That premium comes from the entry discount at purchase and more seasoned portfolio exposure with shorter remaining duration. The premium shrinks when buyers compete aggressively for quality positions, pushing pricing closer to NAV.

Are credit secondaries safer than equity secondaries?

Generally yes, with caveats. Private credit funds hold debt instruments with contractual cash flows, senior positions in the capital structure, and regular income distributions. Equity secondaries hold fund interests in companies where returns depend on uncertain exit events. Credit secondaries show lower volatility, faster cash-on-cash returns, and higher pricing relative to NAV. The caveat: credit default events in the underlying portfolio can impair returns significantly, and credit losses in high-yield or distressed credit secondary positions can be severe.

How long does a typical credit secondary fund take to return capital?

Shorter than equity secondaries. Because underlying private credit loans typically have 3-5 year maturities (often shorter than equity fund hold periods), credit secondary funds often begin returning capital within 2-3 years of investment and complete distributions in 5-7 years. Compare this to equity secondary funds that often run 7-10 years to final distribution. The shorter duration is a significant structural advantage for investors who want to recycle capital into new opportunities faster.

Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.