The Rise of Private Credit: What’s Driving the Boom and What Comes Next

Private credit has quietly emerged as one of the most dynamic forces in the global investment landscape in 2025 and it is no longer flying under the radar.

At the start of 2024, the market stood at approximately $1.5 trillion. Now, with estimates projecting that figure to surge to $2.6 trillion by 2029, private credit looks like it going to be firmly established as a core part of institutional and increasingly private portfolios.

But what’s fuelling this rapid rise? And what does it mean for investors looking to diversify in today’s unpredictable economic environment?

Banks Back Out and Private Credit Steps In

One of the primary drivers behind the expansion of private credit is the retreat of traditional banks from mid-market lending. Regulatory tightening, capital reserve requirements and wider economic uncertainty has made banks far more risk averse. All of this has left a gap in the market and private lenders have been quick to fill it.

For businesses, particularly small-to-mid sized, private credit offers a lifeline. It gives them faster decision-making, more flexible terms, and access to capital that would otherwise be out of reach. For investors, this has opened up a high-yield opportunity with potential for steady returns, often backed by real assets or revenue-generating cash flows.

Time for a Change

With central banks around the world pushing interest rates high in an effort to control inflation, investors have begun searching for alternative investment opportunities. Private credit offers a compelling answer. Deals are often structured with floating interest rates, which means returns rise in tandem with broader market rates and built-in protection against inflation.

That makes it particularly attractive in today’s climate, where bond yields remain volatile and equity markets continue to react sharply to geopolitical shifts, trade policy, and central bank signals.

Institutional Money Joins the Party

What began as a niche play among private funds has quickly gained traction with large institutional players. Pension funds, insurance companies, and sovereign wealth funds are now allocating significant capital to private credit, recognising its role in delivering consistent, non-correlated returns. This institutional validation has turbocharged growth in the space. The inflow of capital has helped fund larger deals, scale operations, and bring greater professionalism and due diligence to the sector. All of this makes it more appealing for wealth managers and high-net-worth individuals looking to diversify.

Alan Graham, Director of UAE at Balqis Capital, said: “Private credit has shifted from an alternative to a necessity.

“In a world where equity markets are unpredictable and bond markets are under pressure, investors want what private credit offers – stable income, downside protection, and a more direct relationship with real-world economic activity.”

He added: “At Balqis Capital, we’ve seen a surge in demand from family offices and institutional investors seeking exposure to high-quality private credit deals. Our role is to ensure those opportunities are not only accessible, but also thoroughly vetted, risk-managed, and aligned with our clients’ objectives.”

The Role of Balqis Capital

Balqis Capital is a market leader in sourcing private credit opportunities. From bespoke lending deals across emerging markets to highly structured corporate finance solutions in established economies, the firm provides access to transactions that would otherwise be unavailable to most investors.

Balqis acts not only as a capital connector but also as a trusted due diligence partner – evaluating borrowers, structuring deals, and providing ongoing risk oversight. This combination of insight and access to opportunities through its trusted network is invaluable.

The Balqis Capital Bond

The Balqis Capital fixed income bond earns a 10.25% per annum fixed return for investors. The opportunity is sourced from carefully underwritten private credit deals which offer strong yields unavailable in traditional fixed income.

Capital is strategically deployed through Balqis’ global network into a diversified portfolio of secured, asset-backed loans, designed to deliver attractive yields while prioritising capital preservation.

Leveraging this global network enables Balqis Capital to source and tailor opportunities that align with current market dynamics and investor demand. This investment is designed for those seeking higher income, portfolio diversification, and exposure to institutional-grade credit strategies outside of public markets.

Future Projections: A $2.6 Trillion Opportunity

According to industry forecasts, the global private credit market is expected to grow from $1.5 trillion at the start of 2024 to $2.6 trillion by 2029. That represents a 73% increase in just five years – showing both the appetite for private lending and the durability of the trend.

Much of this growth will come from expanding sectors such as infrastructure finance, real estate debt, and specialised lending in tech and healthcare. Regions like the Middle East and Southeast Asia are also expected to play a bigger role as deals becomes more global and investors seek geographic diversification.

What It Means for Investors

The rise of private credit offers a timely lesson for investors still tied to outdated portfolio models. Traditional equities and bonds still have their place, but in an era defined by market shocks and rapid realignments, a more flexible and diversified approach is essential.

Private credit is now becoming a core allocation for investor portfolios, particularly for those who value predictable income, strong collateral, and resilience in volatile markets.