
The need for liquidity creates credit secondary opportunities
Credit secondaries - Annual transaction volume
Source: Jefferies and HarbourVest, as of July 8, 2025. 2025 and 2027 figures are estimated by Jefferies. 2026 figure reflects HarbourVest’s estimate based on Jefferies data. Dry powder source Evercore FY Secondary Market Review as of February 2025. Past performance is no guarantee of future performance.
Key takeaway
The credit market is experiencing a growing need for structural liquidity solutions, presenting significant opportunities for secondary buyers.
As the private credit market continues to grow, currently standing at around $1.6 trillion,1 the demand for liquidity solutions for both limited partners (LPs) and general partners (GPs) has also increased. Institutional investors have turned to the secondary market to sell exposures to accelerate distributions, maintain their desired credit allocation, free up capital to make new commitments, and to manage the composition of their portfolio. As more institutions look for sources of liquidity in the private credit market, there is a significant opportunity for buyers in the credit secondaries market.
Credit secondary transaction volumes rose from $6 billion in 2023 to $10 billion in 2024 to an estimated $17+ billion in 2025 – a CAGR of 70%+ since 2023. Estimates place 2027 volume as high as $40B+ (see chart above). Despite this growth, the market is currently undercapitalized, with only 4% of secondaries capital sitting in dedicated credit funds. This is creating two notable opportunities for credit secondary investors: the potential for enhanced returns and a more favorable risk profile.
Credit secondaries offer the opportunity to generate potentially higher returns by capturing discounts and by using structuring mechanisms. By investing in seasoned pools of assets, buyers may be able to better price default risk, by mitigating blind pool risk. As the need for liquidity solutions continues to grow, we believe the credit secondaries market is poised to become a core segment in the private credit market. Read our recently published “The Case for Credit Secondaries: A Timely Opportunity for Private Credit Investors” for deeper insights into this evolving asset class.
The HarbourVest advantage
- Source: Preqin as of 12/31/2024
Diversification does not ensure a profit or protect against a loss.
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Credit Secondaries Investing Risks. Investments into secondary investments in Underlying Portfolio Funds focusing primarily on senior secured credit investments include risks related to both secondary market transactions generally as well as risks specific to such credit investments will apply with respect to a portfolio. Secondary market transactions may impose higher costs than other investments and may require a portfolio to assume contingent liabilities associated with events occurring prior to the investment. The overall performance of an investment in an Underlying Portfolio Fund acquired through a secondary transaction will depend in large part on the purchase price paid. In addition, the portfolio will generally not have any ability to negotiate terms with respect to interests in Underlying Portfolio Funds acquired through secondary market transactions. Investments in senior secured credit investment portfolios through its Underlying Portfolio Fund investments will expose a portfolio to credit risk, which is the risk that a borrower will be unable or unwilling to make principal and interest payments on its outstanding debt obligations when due. Adverse changes in the financial condition of a borrower and general economic conditions (or both) could impair the ability of a borrower to make payments on its senior debt and result in defaults on, and declines in, the value of such debt as well as, potentially, the collateral securing it. There is no assurance that such collateral will be sufficient to mitigate the losses incurred as a result of defaults.