On September 24, McKinsey & Company reported that the U.S. private credit market has grown to nearly $2 trillion. The report highlights a shift toward nonbank lending, reshaping the financial landscape as banks withdraw from leveraged lending.

According to McKinsey & Company, over the past 15 years, private credit has rapidly expanded, reaching nearly $2 trillion in assets by the end of 2023. This marks a significant increase from 2009. While still a small segment of fixed-income markets, it has outperformed traditional financing options. Analysts suggest that the U.S. addressable market for private credit could exceed $30 trillion, indicating its rising importance. Initially focused on direct lending, the sector is diversifying into various financing structures as banks reduce their involvement in leveraged lending.

The competitive landscape has broadened as traditional lenders, insurance companies, and asset managers increasingly participate in private credit. This shift suggests a transition from bank balance sheets to nonbank entities across diverse asset types, prompting a need for financial institutions to adapt their business models in response to new dynamics.

McKinsey & Company anticipates four key trends shaping the industry: diversification of asset classes, growth of ecosystem partnerships, enhanced competitive advantages through scale, and increased reliance on technology. These trends will lead to more integrated business models, allowing market participants to optimize their roles in the value chain. Institutions are encouraged to reassess their strategies by focusing on origination and distribution and embracing technological advancements.

McKinsey operates as a unified global partnership with a focus on attracting and developing diverse talent while facilitating significant change for clients. The company collaborates with clients across all organizational levels to drive innovation, enhance performance, and create resilient workforces.