Private Credit Is Not Dying. It Is Consolidating

TL;DR: Golub Capital co-CEO David Golub calls the current private credit stress a "Darwinian moment," not a crisis, according to ION Analytics' Creditflux reporting. I think he is right, and the fact that JPMorgan and Goldman Sachs are both actively deploying fresh capital into this exact dislocation is the tell that separates a cyclical shakeout from an asset class in genuine decline.

A Different Word for the Same Facts

Every fact driving the "private credit crisis" headlines this week is real. Bathla Group collapsed owing roughly $3.5 billion. Per Capital Brief's newsletter coverage, Centuria Bass froze redemptions, MA Financial capped withdrawals at 1% a month, and 360 Capital halted trading. None of that is in dispute, and I am not going to pretend otherwise.

What I disagree with is the conclusion people are drawing from those facts. David Golub, co-CEO of Golub Capital, described the moment on the Credit Exchange podcast, hosted by Lisa Lee, as a "Darwinian moment," a period where some managers lose access to capital and become less relevant to private equity sponsors, while the asset class as a whole self-cures into fewer, larger, better-capitalized firms. He was explicit that this is not abnormal: spreads coming down, credit stress rising, is what happens in every asset class's cycle, and most current private credit managers and investors have simply never lived through one before.

I have watched this exact pattern play out in other cycles, and Golub's framing matches what I have seen every time: a shakeout that culls the weakest operators is not the same thing as the underlying business model failing. Confusing the two is the single most common mistake retail investors make when a hot asset class hits its first real test.

The Scale Nobody Panics About

Global private credit assets under management have grown past $2.1 trillion, with US-domiciled funds representing roughly 68% of the total, growing at approximately an 18% compound annual rate from 2020 through 2025, according to Preqin data cited by USA Business Times. An asset class that has grown that fast for that long, per USA Business Times' broader reckoning piece, was always going to have a first real stress test. The question worth asking is not whether stress arrived, it obviously did, but whether the structural demand driving that growth, institutional and retail appetite for yield above what public credit markets offer, has actually gone away. It has not.

Golub also pointed to a specific, measurable signal that the market is repricing risk correctly rather than ignoring it: spreads are widening, and terms are becoming more lender-friendly again for new capital being deployed right now. That is exactly what should happen in a healthy correction. Lenders who overextended on price during the boom get squeezed out or forced to raise standards, and new capital coming in gets better risk-adjusted terms than capital that went in at the top of the cycle.

Follow the Banks, Not the Headlines

Here is the evidence I find most convincing that this is consolidation, not collapse: the institutions with the deepest credit underwriting expertise on the planet are actively putting fresh money into this exact dislocation, right now, rather than retreating from it.

JPMorgan set aside $50 billion for direct lending in February 2025, and in April 2026, its asset management arm launched a new direct lending platform specifically amid the market dislocation, according to reporting cited by USA Business Times and The Middle Market. Goldman Sachs Asset Management, which already runs roughly $160 billion in private credit AUM, raised a dedicated $4.8 billion opportunistic credit fund targeting stressed and distressed private debt positions. Banks with the balance sheet and underwriting talent to price risk accurately do not typically pour billions of fresh capital into an asset class they believe is structurally broken. They pour capital in when they believe the pricing has become attractive relative to the actual credit risk, which is a very different signal than the one the "private credit is dying" headlines are sending.

Public markets are telling a similar story. The S&P BDC Index, which reflects real-time investor sentiment on publicly traded business development companies, climbed roughly 6% over the same window that non-traded fund redemption queues were piling up. That divergence is not a mistake in the data. It reflects a market distinguishing between a liquidity-structure problem in specific illiquid vehicles and a genuine collapse in underlying credit quality across the asset class as a whole.

What This Actually Means for You

I am not telling you to buy every private credit fund on the market because Golub called this a "Darwinian moment" and two large banks are deploying capital. I am telling you to separate two questions that the current headlines are collapsing into one. Question one: is private credit as an asset class structurally broken? The evidence, fresh bank capital, a growing AUM base, widening spreads on new deployment, says no. Question two: are some specific managers, specifically the ones who chased yield into concentrated real estate exposure or over-levered their balance sheets during the boom, going to fail or get absorbed? Almost certainly yes, and that culling is a feature of the cycle working correctly, not evidence the cycle has broken.

If you are evaluating a private credit allocation right now, the smart move is not fleeing the category wholesale. It is being more selective than you were eighteen months ago: favor managers with demonstrated underwriting discipline through this specific stress test, check for genuine borrower diversification rather than concentrated bets on one sector or region, and recognize that capital deployed into today's wider spreads and more lender-friendly terms may carry a better risk-adjusted return profile than capital that went in during the boom.

What Would Actually Change My Mind

I want to be specific about what would make me abandon this contrarian read, because a thesis you cannot falsify is not a thesis, it is a slogan. If JPMorgan or Goldman pulled back their new commitments rather than continuing to deploy them, that would be a real signal the smart-money view had shifted. If the private credit default rate kept climbing well past its current 6.0% record with no sign of stabilizing over several more quarters, that would suggest the credit cycle is worse than a normal shakeout. And if spreads stopped widening, or lender-friendly terms failed to materialize on new deployment the way Golub described, that would undercut the self-curing mechanism his framing depends on entirely.

None of those things has happened yet. What has happened is a real, painful culling of over-levered developers and the managers who financed them without adequate diversification, exactly the kind of correction a maturing $2.1 trillion asset class was always going to face eventually. Betting that this specific asset class disappears because some of its weakest participants just failed their first real stress test is a bet against four decades of how credit cycles have consistently played out before.

For more on this, see our coverage of Private Credit Default Rates 2025: Three Indices, Three Very Different Stories, Private Credit ETFs and the Liquidity Illusion, and BDC Discounts to NAV Are Flashing a Warning the Market Won't Ignore.

Frequently Asked Questions

What does "Darwinian moment" mean in the context of private credit?

David Golub, co-CEO of Golub Capital, used the term to describe the current private credit stress cycle as a normal, self-curing shakeout that will consolidate the industry into fewer, larger, and higher-quality managers, rather than a structural failure of the asset class.

Are banks re-entering private credit right now?

Yes. JPMorgan set aside $50 billion for direct lending and launched a new direct lending platform in April 2026, while Goldman Sachs Asset Management raised a $4.8 billion opportunistic credit fund targeting stressed private debt, both deploying fresh capital into the current dislocation.

How big is the global private credit market?

Global private credit assets under management have surpassed $2.1 trillion, with roughly 68% domiciled in the US, having grown at approximately an 18% compound annual growth rate between 2020 and 2025, according to Preqin data.

Does this mean I should invest more in private credit now?

Not automatically. It means distinguishing between the asset class as a whole, which shows signs of healthy repricing rather than structural failure, and individual managers who may still fail this stress test. Favor managers with demonstrated underwriting discipline and genuine diversification.

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.