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Private credit firms sold a record amount of debt to themselves last year as the buyout sector’s slowdown pushed them to find new ways to generate cash from loans to companies owned by private equity.
Private lenders struck so-called continuation deals worth $15bn globally in 2025, up from almost $4bn the previous year, according to investment bank Jefferies. Such deals involve fund managers establishing new vehicles to buy loans from their old funds.
Many of the rolled-over loans were originally extended to finance leveraged buyouts by private equity managers, Jefferies said, but were taking longer than expected to be repaid due to a lack of deals.
The boom in private credit continuation deals is the latest hangover from a years-long drought in private equity exits, with buyout firms instead holding on to businesses for longer and delaying repayment of those companies’ loans.
Advisers also say the surge in funds raised by direct lending vehicles in recent years has resulted in more activity in the so-called secondary market. It includes both managers selling to themselves as well as fund backers selling on stakes in those vehicles.
“The amount of capital raised in private credit, coupled with a slowdown in the exit environment for private equity managers, has led to fund investors and credit managers seeking liquidity,” said Todd Miller, global co-head of secondary advisory at Jefferies.
Last week Crescent Capital Group closed a $3.2bn continuation vehicle, the largest in the private lending market, which bought a portfolio of loans to private equity-backed companies and other assets from an older Crescent fund.
Backers of credit funds, such as pension plans, also sold more stakes in ageing funds than ever last year, with the value of transactions up from $6bn in 2024 to $10bn.
Jeffrey Griffiths, global head of private credit at advisory firm Campbell Lutyens, said it was “private equity firms that decide when an exit or a refinancing happens, not the credit manager, and in this higher-rate environment that’s happening more slowly”.
Griffiths said there had been considerable activity by direct lending funds from 2016 to 2018, but that those funds were now approaching the end of their lives: “There’s loans sitting there, nobody knows what to do with them, and credit managers are not in a position to sell them.”
Simon Saitowitz, a partner specialising in secondaries at law firm Weil, said continuation vehicles helped fund managers return cash early to the backers of their original funds to support future fundraising. They also allowed firms to make extra management fees on existing investments.
The spike in continuation vehicles comes as investors, concerned over credit quality following the bankruptcies of First Brands and Tricolor, have pulled back from some of private credit’s biggest funds in a blow to one of the fastest-growing areas of finance.