Private credit GPs expect liquidity relief in 2027-28

69% of private credit general partners expect liquidity conditions to improve meaningfully in 2027 or 2028, according to a Goldman Sachs Alternatives survey of 36 GPs and 225 LPs worldwide. The poll ran from June to August and was first reported by Alternatives Watch.

Another 22% put the recovery beyond 2028, while 8% expected improvement by the end of 2026. The Goldman Sachs report suggests longer holding periods, limited sponsor-to-sponsor transactions and a narrow exit market may be contributing.

For allocators, the practical result is heavier due diligence on manager selection and on whether valuations are comparable across books. A quarter of LPs already invested in private credit named manager selection as their biggest challenge, ahead of valuations at 22% and liquidity at 18%. Goldman Sachs expects rising payment-in-kind income and amendment-and-extension activity to sharpen scrutiny of whether managers' valuation methods are transparent and comparable, two places where a direct lending book's marks can diverge from a peer's.

More than half of LPs, 53%, named rising defaults as the greatest risk to their private credit portfolios, ahead of a macroeconomic shock or recession (19%), spread compression (16%) and refinancing concerns (12%).

Asset-backed finance drew the most planned increases over the next three years: 58% of allocators expected to commit more, a share that reached 64% in the Americas. Goldman Sachs cites collateral diversification, contractual cash flows and amortizing repayments as features that can give some visibility into performance.

The appetite is running ahead of current allocations. 56% of LPs described themselves as underallocated to private credit, up from 43% in the 2025 survey, as Private Wealth Daily previously reported. "As private credit matures, dispersion matters as much as direction: allocators must be as selective in choosing managers as managers are in choosing borrowers," said Stephanie Rader, global co-head of alternatives capital formation at Goldman Sachs.