BIP Wealth CIO Eric Cramer explains what's really happening in private credit in 2026—why the redemption headlines are misleading, how senior secured lending protects investors, and what to expect going forward.
A summary of key insights from BIP Wealth Chief Investment Officer Eric Cramer’s recent webinar on the state of private credit and what it means for investors.
If you’ve been reading the financial news lately, you’ve probably seen some alarming headlines about private credit. Words like “crisis,” “redemptions,” and “growing concern” seem to be everywhere. However, the gap between what the financial media is reporting and what we’re actually seeing in the space has rarely been wider.
Here’s what you need to know.
What Is Private Credit, Anyway?
At its core, private credit is simply lending that doesn’t happen on a public exchange. It’s the original business of banking—you deposit money, and the bank makes loans with it. Any debt that isn’t publicly tradable qualifies as private credit, whether it’s a single loan or a bundle of them.
Think of it this way: if you’ve ever had a mortgage, a car loan, or a business line of credit, you’ve been on the borrowing side of private credit. The investment side just means you’re the one providing that capital and earning interest in return.
I like to tell people that one of the best ways to learn about private credit is to watch Mary Poppins. I’m serious. The film is set in 1910 England and the family’s last name Banks, which is no coincidence. There’s even a musical number about how the bank takes young Michael’s two pence and puts it to work making loans. That’s essentially a musical number about private credit.
And here’s the part I love: in the sequel, set decades later during the Great Depression, Michael’s money has stayed in the bank all that time. It’s grown enough to pay off his mortgage and rescue his family financially. It’s a memorable illustration of the potential value of a long-term investment horizon.
Why Today’s Headlines on Private Credit Are Misleading
Several recent news stories have painted a troubling picture of private credit, but a closer look suggests a more nuanced reality.
When Blackstone’s private credit fund saw increased redemption requests, management and ownership responded by putting their own money into the fund—a classic vote of confidence. The media, however, framed it as a crisis. When Cliffwater’s interval fund experienced higher-than-usual redemption requests, it wasn’t because the loans were in trouble, it was simply because Cliffwater is the easiest place for investors to access cash quickly. And when Blue Owl sold a $1.27 billion package of loans, they sold at exactly the price they were carrying those loans on their books—99.7 cents on the dollar—which actually validated the strength of their portfolio.
In each case, the underlying investments were performing well. The stories were about investor behavior, not investment quality.
It’s worth noting that on the institutional side, capital continues to flow into private credit. The headline-driven anxiety has been largely concentrated among retail investors.
Where the Real Pressure Is Coming From
So why are some retail investors looking for cash in the first place? The answer lies mostly outside of the private credit space.
Tech stocks experienced significant sell-offs in early 2025 and again in Q1 2026. The S&P 500 IT sector was down over 9% in the first quarter of 2026 alone. Meanwhile, crypto has been hit even harder, falling roughly 50% from its highs. Many of those investors were highly leveraged, meaning they had borrowed money to invest. When their bets went south, they needed to find cash somewhere, and private credit was one of the safest, most stable places they had money sitting.
In other words, the redemption activity in private credit isn’t a sign that private credit is broken. It’s a sign that other parts of the market are under stress, and investors are tapping their most reliable accounts to cover losses elsewhere.
Not All BDCs Are Created Equal
Part of what may be fueling confusion is a misunderstanding about a term you may have seen: BDC, or Business Development Corporation. There are publicly traded BDCs, the kind you can buy and sell every minute in a brokerage account, just like a stock, and then there are privately traded BDCs, which is the type BIP Wealth utilizes in some client portfolios.
The publicly traded versions tend to be more speculative in nature, often carry higher fees (in many cases 5–6% per year), and a number of them trade at significant discounts to their net asset value. In the first quarter of 2026 alone, some of these publicly traded BDCs experienced losses of 25–30%. It’s possible that many of the journalists writing alarming private credit headlines are looking at these publicly traded BDC vehicles—which are not part of BIP Wealth’s current private credit strategy—and conflating them with the broader private credit market.
The “SaaSpocalypse:” Real Threat or SaaSquatch?
One of the buzzwords making the rounds is “SaaSpocalypse”—the idea that artificial intelligence will wipe out the Software-as-a-Service industry. Since many private credit loans are made to software companies, this has raised some eyebrows.
The reality is more complex. Yes, AI will change the software landscape over time. Some SaaS companies may lose customers who can replicate certain functions using AI tools. But many SaaS companies are themselves becoming AI-enabled, and any major disruption will take years, not months, to play out.
More importantly, if you’re worried about SaaS companies struggling, the equity investors (the people who own stock in those companies) stand to lose far more than the lenders. Private credit investors sit higher in what’s known as the “capital stack,” meaning they get paid before equity holders. If a company’s value declines, the stockholders absorb the losses first.
Understanding Your Position: The Capital Stack
Knowing your position in the capital stack is perhaps the most important concept for private credit investors to understand. When you invest in private credit through BIP Wealth, you’re primarily in “senior secured” loans. That means your claim on a company’s assets is near the top of the priority list, ahead of subordinated debt, convertible notes, preferred equity, and common stock.
When I reference a stock like Microsoft dropping a certain percentage, I’m showing you what happened to the common equity, which is at the bottom of the capital stack, where the greatest risk of loss typically resides. Senior secured lenders sit near the top. If a company runs into trouble, senior secured debt holders are generally among the first to be repaid. The equity investors—the ones whose stock prices you see on CNBC—bear the greatest risk. And in many cases, those private equity investors will actually inject more capital into a struggling company to keep it healthy, which makes the senior secured loans even safer.
What Are Evergreen Funds, and Why Do They Matter?
BIP Wealth primarily uses “evergreen” private credit strategies. Unlike older models that required periodic capital calls and had unpredictable timelines, evergreen funds work on a “fund and done” basis. You invest when you’re ready, you earn income along the way, and there are regular opportunities to withdraw.
This structure is becoming the new standard across the industry. In 2025 alone, nearly 80 new evergreen funds launched. Institutions like university endowments and insurance companies are adopting them too, not just individual investors. It’s a more accessible, more transparent, and often lower-fee way to participate in private credit.
The strategies many of you are familiar with, including those managed by firms like LAGO, Monroe, KKR, Barings, and Cliffwater, are the types we’ve evaluated through our due diligence process and offer to clients. Each may serve a slightly different role in a diversified private credit allocation, depending on an investor’s individual circumstances.
Redemption “Gates” Are a Feature, Not a Flaw
You may hear that certain funds are “gating” redemptions, meaning they’re limiting how much investors can withdraw in a given quarter. This sounds alarming, but it’s actually a protective feature, similar to an early withdrawal penalty on a bank CD.
These funds are designed to honor a set percentage of redemption requests each quarter (typically 5–7.5%). If requests exceed that threshold, everyone receives a proportional share. The reason is simple: managers don’t want to sell loans at a discount just because some investors are in a rush. That would hurt the long-term investors who are staying put.
Most of the underlying loans in these portfolios mature in three to four years. If a fund simply stopped making new investments and let everything run its course, it would all convert to cash naturally. There’s no fundamental liquidity problem, just a temporary mismatch between redemption requests and the pace at which loans mature.
What Should You Expect Going Forward?
Continued communication from BIP Wealth. The BIP investment team monitors these markets daily, reads hundreds of articles, and is in constant contact with fund managers. As long as private credit remains in the news, clients can expect regular updates.
More headlines about redemptions, non-accruals, and PIK rates. Non-accruals (borrowers temporarily not making interest payments) and PIK rates (pay-in-kind, where you receive additional principal instead of cash interest) are normal features of lending. For the strategies BIP Wealth recommends, these metrics remain stable and healthy.
Some minor pricing adjustments. As credit spreads widen—meaning new loans are being made at slightly higher rates—existing loans may be marked down slightly to reflect the new market rate. This doesn’t mean the loan is in trouble; it’s simply a bookkeeping adjustment. And the good news is that new investments going into these funds will earn those higher rates, which benefits long-term investors.
Higher yields ahead. The same market dynamics causing short-term noise are actually creating better opportunities. Funds that were projected to yield 9% may now deliver 10% or more, as lenders can command better terms from borrowers.
Possible gating of redemptions. As I explained above, this is a structural feature designed to protect shareholders from forced selling at unfavorable prices. We view it as a prudent risk management tool, not a warning sign.
The Bottom Line
Private credit, particularly the senior secured, diversified, evergreen strategies that BIP Wealth recommends, remains one of the most stable and attractive corners of the investment landscape. The headlines are driven by a combination of media sensationalism, stress in unrelated markets like tech stocks and crypto, and a fundamental misunderstanding of how private lending works.
I’ll leave you with this: Michael Banks left his two pence in the bank, and in the story, it made all the difference. By the time the sequel rolled around decades later, that small investment had grown enough to pay off his mortgage. While fiction isn’t a substitute for financial analysis, the principle of maintaining a long-term perspective, particularly during periods of short-term volatility, has historically served investors well. The investors who stay the course tend to come out ahead.
If you have questions about your own private credit holdings or want to discuss your portfolio, reach out to us to connect with a BIP Personal Wealth Advisor. They’re engaged in this analysis on a regular basis and are ready to discuss the choices that may be right for your individual circumstances and risk tolerance.
Want to Explore Private Credit Yourself? Start Here Using AI.
One of the best ways to build confidence in any investment is to understand it on your own terms. For those who want to dig further into private credit, here are a few prompts you can use with AI tools like ChatGPT or Claude to explore the data behind the strategies we use at BIP Wealth:
“Within private credit, which strategies have demonstrated the lowest default and loss rates over time?”
“What structural protections exist in senior secured loans that are not present in other forms of private credit?”
“How does private equity sponsorship affect recovery rates in direct lending?”
“What have been the historical loss rates for senior secured direct lending funds through economic cycles?”
“What are typical covenant packages in sponsor-backed senior secured private credit deals?”
“How do loan-to-value ratios in private credit investments compare to broadly syndicated loans?”
“How does covenant enforcement impact loss severity in direct lending?”
And here’s a bonus tip: Once you get an answer, ask, “What would be some other good questions for me to ask about private credit?” It will generate a whole new set of prompts to keep learning from. Just be mindful—it’s easy to spend an afternoon going down that rabbit hole.
This blog post is a summary of a recent BIP Wealth client webinar and is intended for informational purposes only. This post should not be construed as investment advice, nor a recommendation or solicitation to buy or sell any security. Ideas contained within this post regarding the market or market conditions represent the views of the author or the sources cited and are subject to change without notice.
All investing involves risk, including the possible loss of principal. Private credit investments involve additional risks, including illiquidity, limited transparency, credit risk, interest rate risk, and the potential for restrictions on withdrawals. Past performance is not indicative of future results. There can be no assurance that actual outcomes will match any expectations described in this post.
Investors cannot invest directly in an index. Index performance does not reflect fees, expenses, or transaction costs associated with the management of an actual portfolio. Data from third-party sources (Morningstar, PitchBook, Standard and Poor’s, MSCI) is believed to be reliable but BIP Wealth cannot guarantee accuracy. Forward-looking statements, estimates, and forecasts are based on assumptions and are not guarantees of future performance.
Investors should consult with their Personal Wealth Advisor to determine what is appropriate for their individual circumstances and risk tolerance. BIP Wealth, LLC (“BIP Wealth”) is registered with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC and other state securities authorities as a registered investment adviser does not imply a certain level of skill or training.
