• Following the financial crisis, nonbank lenders looking to carve out new, profitable niches—especially within the leveraged loan universe—quickly filled the lending gap created by the exit of banks.

• The relatively swift recovery of the private equity (PE) industry from the nadir of the financial crisis also helped reinforce demand for private debt solutions. As dry powder levels inflated to record levels, competition for choice assets intensified, producing new strategies across PE and private debt in turn.

• Private debt fundraising within the U.S. consequently hit a record in terms of capital raised in 2017, at nearly $80 billion. However, the volume of private debt fundraising started slowing a few years earlier, as the environment grew heated and as early movers absorbed market share. For example, direct lending, one of the faster-growing segments post-crisis, reached its decade apex with 33 funds closed in 2015.

• Private debt dry powder has hit an all-time high, pressuring players to develop new strategies in an attempt to differentiate further, whether in approach or in target areas such as less-popular sectors and smaller segments of the U.S. middle market.