Private markets investment management firm Hamilton Lane (NASDAQ:HLNE) said it does not believe there is a private credit bubble in its most recent 2026 market overview.

“With the increased capital available, with the increase in market share, with the ongoing press about the pressures on private credit, the casual observer would think that yields and spreads of private credit over broadly syndicated loans were collapsing. That would be a completely incorrect assumption,” Hamilton Lane wrote.

• Hamilton Lane stock is showing upward movement. Why is HLNE stock trading higher?

“Sponsors want private credit and seem willing to pay for what it has to offer. There is no sign of stress with these spreads or returns, relative to broadly syndicated loans,” the report continued.

Hamilton Lane believes banks carry “far riskier” loan pools than private credit, and the latest defaults are a problem with the banks, not with private credit itself.

Private credit has continued to reshape the global lending landscape, even as a prolonged bull market in credit has left the broader market showing few signs of stress. Hamilton Lane predicts tprivate credit losses will be “lower than losses in similar securities held by banks or the broadly syndicated loan market. Perhaps far less.”

Fundraising in this credit environment will be dominated by evergreen or semi-liquid vehicles, which will result in a small group of very large managers.

“If you are not a major player in that space now or in the very near future, you will not have a meaningful private credit franchise,” the asset manager wrote.

How Size and Scale Shape Private Credit Success

Even if there is a niche strategy or a place in the market, what will prevail is the size and scale of the business.

One area to watch is how much exposure the fund or manager has to AI-related infrastructure, data centers and energy.

While there is no valuation bubble surrounding AI right now, there are signs that point to it, including the amount of capital that’s being spent on large language models (LLM), which makes it hard to envision the revenue that will justify it. It is also not a lack of demand but lack of infrastructure and energy it takes to build these data centers.

“Ironically, it might be a bubble if there weren’t real-world constraints to letting the bubble happen,” the firm wrote.

Investors should position their portfolio as if there is a real possibility that there is one. If that bubble pops, it will most likely be because the LLMs aren’t scaling.

Hamilton Lane noted that government regulation, while hard to fathom in the U.S., might be on the horizon.

“At some point, particularly if losses occur, and occur for wealth channel investors, regulators may conflate private credit firms with banks and regulate their activities,” Hamilton Lane wrote.

“Private credit is not in a bubble. If it’s not in its Golden Age, it is in its Silver Age,” Hamilton Lane concluded.

Photo: Shutterstock