Ten years ago, private credit was mostly an American story: direct lenders writing unitranche facilities for mid-market buyouts in Ohio and Texas, with a modest European outpost. Today the same funds have views on Iberian solar portfolios, Gulf logistics platforms and Australian healthcare groups. The asset class went global, and the reasons are worth understanding, because they shape what borrowers can raise and where.
Scale wanted somewhere to go
The arithmetic is simple. Institutional money committed to private credit grew several times over in a decade, and the American middle market, however deep, could not absorb all of it at the spreads investors underwrote. Fund managers went looking for the same risk characteristics elsewhere: sponsor-backed companies in Europe, infrastructure with contracted revenues, asset-backed lending in markets where banks were distracted.
Regulation did the rest. European banks spent a decade under instruction to hold less of exactly this risk, which left a structural gap in every market from Amsterdam to Athens. The funds moved into the gap and, having built the teams, stayed.
Borrowers feel the change in bank behaviour as much as in fund behaviour. Knowing that a credit fund will quote within ten working days changes the conversation a borrower has with its own bank: suddenly the incumbent is negotiating rather than deliberating. The banks have responded with lighter credit processes for mid-market names and with partnership roles, taking distribution positions on deals the funds hold. For the borrower the result is a market with more doors than hinges, which is precisely how a functioning market should feel.
What actually changed for borrowers
The practical consequence is that a mid-market borrower in Lisbon or Dubai now has lender competition that would have been unthinkable in 2016. Pricing is not always better than bank debt; the funds carry more expensive capital and charge for flexibility. What you buy is speed, certainty and an appetite for complexity: three jurisdictions in one facility, an unusual asset on the security list, a covenant package built for a seasonal business rather than copied from a textbook.
We see the globalisation most clearly in the syndication behaviour. A European private credit house will lead a facility in the Gulf with American money in the club, priced off European comparables, documented under English law. Five years ago that transaction would have been arranged by a bank in two pieces or not at all.
The funds did not replace the banks. They replaced the excuses.
A caveat belongs here. Global private credit has not yet been tested by a serious default cycle, and the asset class's own investors have never watched it marked through a downturn. When that test comes, the lenders who stay will be those with genuinely long-term capital, and borrowers will notice the difference between a fund that must return money in 2029 and one that need not. Raising from the right lender is a maturity question as much as a margin question, and it is worth asking before the market answers it for you.
Where the edge still is
Competition has compressed the obvious margins. The plain sponsor-backed senior unitranche in a core market is now a crowded trade, and the returns have correspondingly thinned. The edge has moved to the edges: second lien in markets where nobody offers it, receivables structures in corridor economies, development finance in jurisdictions where the local banks cycle in and out of appetite.
That is where the diligence burden returns. These are the transactions where the security has to be genuinely thought through, where the exit is a story rather than a formula, and where the difference between a good and bad outcome is the quality of the paperwork. The asset class got global. The work, as ever, stayed local, which is roughly why desks like ours still exist.