In a report dated September 24, McKinsey & Company indicates that private credit has grown to nearly $2 trillion. This expansion raises significant implications for U.S. financial policy as non-bank lending increasingly dominates the market, shifting assets away from traditional banks.

According to McKinsey & Company, over the past 15 years, the private credit market has grown significantly, reaching nearly $2 trillion in assets by the end of 2023—a sharp increase from its 2009 levels. Although it remains a smaller portion of the overall fixed-income market, private credit solutions have consistently outperformed traditional bank financing and public credit offerings. The potential for the U.S. private credit market could exceed $30 trillion, highlighting its increasing role in the broader financial ecosystem.

Non-bank institutions such as asset managers and insurance companies have capitalized on the retreat of traditional banks from leveraged lending. This shift has increased competition as private credit diversifies into asset-based financing structures, attracting capital from the retail and insurance sectors. Rising interest rates and a slowdown in private equity deals have also contributed to the expansion of private credit opportunities.

The private credit space continues to evolve with diversification into new asset classes and growing partnerships between insurers and asset managers. Institutions are focusing on scaling their operations and leveraging technological advancements. Emphasizing technology investments, particularly in areas like automation and data analytics, will be essential to driving operational efficiency and building resilience in this rapidly expanding market.

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