Should Investors Worry About Private Credit

Latest edition · August 10, 2026

Should investors worry about private credit en 1664578

UBS maintains a neutral view on private credit, noting that while systemic risk is limited, investors should prioritize quality and liquidity in an increasingly split, late-cycle market. Lending activity has moderated significantly due to geopolitical headwinds and AI-related sector disruptions.

UBS reports that the private credit market is in a late-cycle phase, characterized by moderate returns and increased caution among lenders. While senior, sponsor-backed, upper-middle-market loans remain resilient, junior and over-levered borrowers face ongoing stress. The report highlights a 56% quarter-over-quarter contraction in lending volumes during 2Q26 and emphasizes the need for investors to maintain liquidity tolerance and prioritize diversification across alternative assets like private infrastructure.

Key takeaways from the latest edition

• 1.Direct lending maintains a Neutral view with a balanced risk-return outlook.
• 2.Lending volumes in private credit have contracted significantly, down 56% quarter-over-quarter in 2Q26.
• 3.Investors should focus on durable, senior, sponsor-backed, upper-middle-market loans.

What this series covers

• Should investors worry about private credit?
• 01 Private credit investors have been worried about several recent developments.
• 02 Late-cycle dynamics and an increasingly split market support a selective approach.
• 03 Diversifying across alternative assets makes sense amid the current uncertainty.
• New this week
• One liner
• Did you know?
• Investment view

Edition archive

• Should investors worry about private credit en 1664578

  August 10, 2026

• Should investors worry about private credit en 1662517

  June 29, 2026

• Should investors worry about private credit en 1662121

  June 22, 2026

• Should investors worry about private credit en 1661190

  June 6, 2026

• Should investors worry about private credit en 1660815

  June 1, 2026

• Should investors worry about private credit en 1659966

  May 19, 2026