More private credit loans are up for sale than ever before on a nascent secondary market, driven by elevated investor redemptions in BDCs that are pushing credit managers to seek ways of boosting liquidity in a skittish market.
However, the elevated inventory of loans for sale does not necessarily mean that secondary trading has increased significantly, market participants say. Instead, the supply of loans is outpacing demand for them, and aftermarket liquidity for private credit loans is thin.
Most offers for the loans are at or very near par, limiting investor appetite for them, market sources say.
“If BDCs are able to sell close to par, they absolutely are considering it. But buyers are not really there in a systematic way to buy these loans at par, and the bid/ask spread remains very wide in reality,” one direct lender said.
Goldman Sachs, Morgan Stanley, JPMorgan, and Jefferies are among the banks attempting to make markets for private credit loans, sending out runs with lists of credits that the originating lenders are willing to sell positions in, market sources say.
This type of market-making has been going on for years as the private credit market grew. PitchBook LCD reported in 2025 on a private credit bank pricing run sent out by JPMorgan.
Now, sources say the volume of loans available for sale is unprecedented. Still, demand for these loans, at least at current prices, means that the efforts by brokers and lenders to create the secondary market continue to yield limited results.
Sources said that the lenders with the most paper up for sale are the managers that have seen elevated fund redemption requests in Q1, which is a relatively large swath of the private credit universe.
The banks are generally sending out portfolios of names, offering to sell the entire bundle of loans, or exploring potential sales of individual credit positions. Many are seeking bids, rather than offering bid/ask spreads, gauging what market participants would pay for the loans, similar to a bids wanted in competition (BWIC) list.
Medallia, a name included on the private credit bank runs sent out last year, is being actively shopped on the secondary market, according to market sources. The name has become a high-profile private credit underperformer, with sponsor Thoma Bravo describing its $6.4 billion take-private acquisition of the business as a “mistake” earlier this month.
Other credits with paper up for sale include many of private credit’s multibillion dollar unitranche club deals, of which many are in the software sector.
Additionally, not all lenders are seeking intermediaries. Some direct lenders have been exploring direct sales to other GPs, often looking to trim their positions in some credits by 10-15% and offering tickets ranging from $10-100 million.
Some private equity sponsors are not supportive of the secondary trading activity. New creditors who buy into a credit via the secondary market can alter counterparty dynamics between lenders and sponsors, potentially bringing in less amicable lenders, market sources say. This largely depends on who the new lender is and their reputation and relationship with the sponsor.
The legal permissibility of these deals can vary based on loan documentation. Sponsors often formulate so-called “DQ” lists (disqualification lists) at a deal’s inception, restricting certain buyers from ever holding the credit.
However, sponsors may have no formal recourse to restrict the trade if the secondary buyer is not explicitly banned by a DQ list, depending on the loan documentation.
Some deals require sponsor approval of a secondary sale, complicating the secondary sale dynamics.
The attempt at market-making for these loans is distinct from the more traditional credit secondaries market, which has separately seen massive growth in multibillion dollar continuation vehicle deals in the past year.
Continuation vehicle transactions often provide liquidity to fund investors, as these secondary trades could, but they do not reduce the credit manager’s ultimate exposure to the underlying credits involved, distinguishing the two kinds of secondary activity.
Goldman Sachs, Morgan Stanley, and JPMorgan declined to comment. Jefferies did not respond to requests for comment.
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