No ‘Cockroaches’ in the Private Credit Market, Just Eager Investors at the Los Angeles CAIS Summit

Last week at the CAIS Summit in Los Angeles, market participants discussed emerging themes facing the private and public markets, from AI disruption to the ongoing competition between private credit and bank lending.

“Overall, the mood of the conference has been positive,” said Ted Koenig, chairman and CEO of Monroe Capital. “There’s been a steady increase of money allocated to private markets.”

The summit, an annual meeting pairing private wealth investors and their advisors with alternative asset managers and leveraged finance lenders, featured Marc Lipschultz, co-CEO of Blue Owl, commenting on the collapse of companies such as Tricolor and First Brands, referring to Jamie Dimon’s warnings of other “cockroaches” in the credit market by reiterating the health of direct lending portfolios.

“Our portfolio is incredibly healthy; we’re not seeing rising defaults,” Lipschultz said in reference to Blue Owl’s loans. “If anything … returning to these bankruptcies … would seem to be evidence of the problem away from the private credit market.”

But underneath the headlines, attendees were constructive on the health of the alternatives market, discussing concerns over AI risk and the consumer sector.

Several conference attendees said they are assessing how disruptive AI might be for software companies in their portfolios, noting that the market faces uncertainty around how to price in AI risk. A handful of companies have recently struggled in the leveraged finance markets on AI risk, such as Getty, Consilio and Verint.

The AI boom has the potential to be “evolutionary not revolutionary” to the software businesses private credit typically lends to, noted one asset manager, who cautioned that certain companies could see their value erode with greater AI adoption. They added that investors are conducting diligence on the potential pitfalls for those credits.

Attendees also noted volatility in the consumer sector, which has made consumer names harder to predict – and perhaps easier to avoid. On the other hand, some highlighted the certainty around earnings for healthcare and technology companies, which has led to an increase in deals in those sectors.

While M&A activity has not fully picked up yet, conference attendees observed that so far this year, refinancings and dividend recaps have accounted for most of the transactional value in private credit, marking a highly unusual shift.

Before the Federal Reserve trimmed interest rates, private credit captured a larger share of the leveraged finance market, offering more favorable pricing and leverage than broadly syndicated loans. Now, with banks back in full swing, the two markets are gradually converging, especially at the upper end of deal sizes, noted one conference attendee.

Broadly syndicated loans and private credit are now virtually identical in that segment, with pricing and leverage aligned and covenants being the main differentiator, the attendee said. The real divergence lies in the lower market, where the syndicated bid remains limited.

Another attendee focusing on private credit in the core middle-market segment noted that the $100 million EBITDA threshold often marks a turning point. Private credit managers dominate club deals below that level, and banks tend to step in more aggressively once the EBITDA is above it. As a result, more large sponsors are pursuing dual-track options, comparing syndicated and private credit packages side by side to determine which generates better returns.

One notable example on the large-cap end of the market comes in the form of Hologic’s multi-billion-dollar dual track. Blackstone and TPG were leaning toward a $12.5 billion broadly syndicated loan package to back the take-private, but they also explored a $11.5 private credit option, according to Octus’ report.

Other market participants pointed to similar dynamics. In the large-cap syndicated loan space, 85% of transactions are refinancings, while in private credit, 90% are fresh deals such as growth financings, acquisitions and add-ons, Ken Kencel, the president and CEO of Churchill Asset Management, said on a panel.

“So these are larger companies that are refinancing to reduce their costs and maybe provide some additional flexibility,” Kencel said.

A private credit professional focused on asset-based finance echoed the refinancing boom, emphasizing that macro uncertainties have weighed on M&A activity. At the same time, amid an average deal life of three to four years, roughly 20% to 30% of the market turns over through refinancing each year. In a $2 trillion corporate private credit market, that equates to about half a trillion dollars of annual refinancing at steady state, he said.

As rooms full of investors considered the alternative asset class, managers sought to educate investors on their offerings. One consistent message from managers was their capability to invest via a multi-strategy platform, offering private wealth investors a bespoke suite of options to deploy their capital. Managers at the conference broadcasted their ability to lend securely in verticals such as asset-backed financings, CLOs, direct corporate lending and equipment leasing.

The reception from private wealth managers was noticeable, with several fund managers noting how sophisticated the advisors and their clients were in their diligence of alternative strategies. Ultimately, as one manager put it, “to be a presence in private markets, you have to be a partner of private wealth.”

Overall, attendees discussed a slow return of new-money issuance in the market in recent weeks, adding that it will be interesting to see how investors digest this uptick in deal flow. Most however, lean toward the consensus of cautious optimism for the M&A pipeline in 2026.

“We need tariff noise to subside to see deal activity pick up,” said Koenig of Monroe Capital. “Once we have certainty around tariffs, we’ll see an increase in deal flow in 2026.”