For decades, public and private credit markets existed in parallel but separate spheres. Public credit offered liquidity, transparency, and standardized processes. Private credit thrived in opacity — characterized by bilateral agreements, limited disclosure, and idiosyncratic deal structures.
That separation is breaking down.
Private credit has scaled into a $2 trillion industry in the U.S., matching the size (and often outpacing the agility) of public high-yield and syndicated loan markets. As both sides of the credit spectrum evolve, we're entering a new phase: a convergence where the boundaries between public and private credit blur, and a hybrid market structure begins to take shape.
This shift is structural. It’s changing how credit is originated, syndicated, monitored, and reported. Whether you're an asset manager, lender, regulator, or fund administrator, convergence isn't something to observe, it’s something to prepare for.
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What’s driving the shift?
A few structural forces are behind the realignment:
- Regulatory pressure. Bodies like the IMF are warning about the systemic risk of opaque private markets. Many lenders are proactively increasing transparency.
- Investor demand. LPs want liquidity and comparability. That’s fueling growth in interval funds, non-traded BDCs, and evergreen vehicles.
- Infrastructure gaps. Managing complex portfolios through Excel and PDFs isn’t sustainable. Credit teams are upgrading systems to support scale, automation, and standardization.
The convergence is particularly visible in fund finance, where banks and private lenders are co-underwriting deals, and in workout scenarios, where public and private lenders must collaborate on governance and resolution.
This trend opens new opportunities. Greater transparency could make private assets more tradable. Standardized terms could unlock broader syndication. Better data infrastructure could help firms identify risk and opportunity faster.
But existing infrastructure was built for siloed portfolios: one system for bank loans, another for bonds, another for private funds. That won’t cut it anymore.
What this means for lenders
To keep up with the pace of change, leading firms are already making foundational shifts:
- Unifying systems across public and private portfolios
- Moving from quarterly updates to real-time borrower monitoring
- Rewriting credit agreements with portability and resolution in mind
- Benchmarking performance across asset classes, not just internally
It’s a tall order, but the reward is operational readiness for a market that’s no longer segmented by old definitions. To enable teams appropriately, the next generation of credit infrastructure needs to:
- Ingest and normalize data across asset types, from borrower financials to fund performance.
- Enable real-time surveillance and alerting, not just quarterly or monthly reporting.
- Support complex structures like subscription lines, hybrid facilities, and multi-tranche capital stacks, all with flexible, enforceable legal logic.
- Surface portfolio-level insights so CIOs and risk teams can evaluate exposure across all credit sleeves, not just in isolation.
This is already happening at the most sophisticated firms. The time to invest in modern systems and cross-functional capabilities is now.
Want the full picture?
In our latest report, we break down the five key drivers of convergence, examples of how it’s already reshaping the market, and what lenders should do now to stay ahead. Check it out here.
