by Alyssa Kubiak and Olivia Nguyen
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In September, Alyssa Kubiak (Investments) and Olivia Nguyen (Business Development) attended the PEI Private Credit New York Forum and the DealCatalyst Asset Based Finance Conference, where they heard from private credit managers, allocators, insurers, and other market participants about the trends shaping the asset class.
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There was plenty of discussion around rates, fundraising, and the credit cycle. But the more interesting conversations focused on what is happening beneath the headline numbers: where terms are holding, where competition is changing the risk-return equation, and which capabilities may matter most from here.
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Here are five takeaways that stood out:
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1. Direct lending has increasingly become two different markets
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Competition in the upper middle market remains intense. Managers described broadly marketed transactions receiving approximately 30 term sheets, with spreads near 300 basis points over SOFR and limited covenant protection.
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The lower middle market still looks different. Spreads can be wider, including SOFR floors of approximately 300–350 basis points, and lenders are more likely to retain maintenance covenants that identify problems earlier.

These opportunities are harder to source and require more hands-on underwriting. But that complexity can come with better economics, tighter documentation, and more meaningful lender protections.
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The takeaway: the “private credit” label does not tell investors nearly enough about the underlying exposure.
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2. Asset-backed finance (ABF) has moved into the mainstream
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ABF was one of the most discussed areas of allocator interest for the next 12 months. The opportunity set now extends across consumer and commercial receivables, equipment finance, royalties, contractual cash flows, specialty finance, and other collateral-backed assets.
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Some managers cited potential unlevered net returns in the 11%–13% range, although returns vary significantly by asset type, structure, duration, and credit quality.
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More importantly, ABF is not simply about finding collateral with an attractive yield. The managers that appear best positioned have sourcing and servicing infrastructure that is difficult to replicate. Proprietary origination, granular collateral data, borrowing-base controls, servicing systems, and recovery capabilities all matter.
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In this part of the market, the operating platform is often just as important as the initial underwriting.
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3. AI is creating a meaningful infrastructure-credit opportunity — but not without new risks
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The buildout of artificial intelligence is driving financing needs across data centers, power generation and transmission, storage, fiber, and communications infrastructure. Many of these projects require customized capital solutions that can fall outside traditional bank parameters.
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Still, “AI infrastructure” covers several very different risks. Financing a contracted power asset is not the same as lending against data-center real estate or computing equipment.
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GPU depreciation was one of the more interesting risks discussed. Credit backed by computing assets requires a close look at technological obsolescence, replacement cycles, useful life, residual value, customer concentration, and remarketing liquidity.
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The growth story is compelling, but the underwriting still needs to work without relying on aggressive assumptions about future demand or collateral value.
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4. Insurers have become a major force in private credit — and regulators are paying attention
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Insurance companies continue to represent an important source of demand for private credit. Conference participants noted that insurers may allocate as much as three times more to the asset class than foundations, driven in part by their need for long-duration assets and predictable cash flows.
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That demand is also influencing how private credit is structured. Rated notes, feeder vehicles, and other insurance-oriented structures are becoming more common.
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At the same time, regulators are increasing their focus on valuation transparency, affiliated transactions, ratings methodologies, and the movement of assets among related parties.
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For investors, it is no longer enough to understand the underlying loans. Leverage, liquidity, governance, structural complexity, and potential conflicts all need to be considered as part of the exposure.
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5. Monitoring matters more than making the perfect macro call
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One of the clearest themes was the renewed focus on credit-by-credit portfolio management.

Managers are spending more time on borrower liquidity, covenant headroom, interest coverage, collateral performance, refinancing needs, and sponsor behavior. Public credit spreads are also being used as a reasonableness check on private valuations and required returns—even if the instruments are not directly comparable.
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This puts a different lens on manager selection. Historical performance remains relevant, but it does not tell the whole story. Sourcing discipline, information rights, asset management, restructuring experience, and workout capabilities may matter more as performance begins to diverge across portfolios.
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The bottom line
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Private credit is broadening well beyond traditional sponsor-backed direct lending. That creates a wider and, in many cases, more interesting opportunity set—but it also makes selectivity increasingly important.
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The same private credit label can encompass fundamentally different collateral, documentation, liquidity, and downside protection. Understanding those differences is where the real work begins.