Credit flows beyond the banks
As regulators tightened capital rules post-2020, non-bank lenders stepped into the void. U.S. private-credit assets exceeded $2.3 trillion in 2025, doubling since 2019. This shadow banking expansion is fueling both innovation and concern.
Table 1. U.S. Credit Market Composition ($ T)
| Segment | 2019 | 2023 | 2025 |
|---|---|---|---|
| Commercial Bank Loans | 10.4 | 11.8 | 12.0 |
| Private Credit Funds | 1.1 | 1.9 | 2.3 |
| Public Bonds | 9.7 | 10.2 | 10.8 |
Sources: Federal Reserve Z.1; Preqin.
Table 2. Default Rates and Spreads (%)
| Year | High-Yield Default | Private Loan Default | Credit Spread (bp) |
|---|---|---|---|
| 2020 | 6.2 | 3.8 | 470 |
| 2023 | 2.5 | 1.7 | 390 |
| 2025 (f) | 3.1 | 2.4 | 420 |
Sources: Moody’s; LCD; Bloomberg.
Systemic implications
Private credit now finances mid-market buyouts and infrastructure that banks once dominated. Yet transparency remains thin, and rising rates could expose weak underwriting.
For business leaders and investors
Diversify funding sources, ensure covenant flexibility, and monitor valuation risks in illiquid portfolios. Regulators are watching—expect disclosure requirements similar to bank stress tests by 2026.