Why private credit’s newest opportunity may lie in what others need to sell

Private credit has spent years being sold to advisers as a comparatively simple proposition: steady income, strong underwriting, and downside protection.

Victor Mayer’s case is that this framing is now too narrow. In his view, the real action in private credit is shifting away from credit quality alone and towards what happens when otherwise sound portfolios are trapped inside broken liability structures. That is where credit secondaries come in, and why Mayer believes the strategy is having a genuine moment.

Specialists pursued credit secondaries as a niche for much of its short life, re‑underwriting loans that had already been underwritten once. Today, Mayer says the market is changing fast.

The sector has grown sharply, evergreen vehicles have introduced new forms of leverage and liquidity mismatch, and secondary buyers have become one of the few flexible sources of capital available when those structures come under stress. In that sense, the opportunity is not necessarily about spotting widespread credit deterioration. It is about understanding what happens when liabilities fail before assets do.

The real risk may no longer be the loan book

Mayer’s most important argument is that private credit investors have become too focused on the asset side of the equation. For years, the dominant questions were about underwriting quality, default risk and seniority in the capital structure. Those still matter, but in the current market Mayer sees a newer and more acute concern, leverage and the liability structure wrapped around the portfolio.

His point is sharp. Many investors think they are buying a straightforward income strategy backed by senior secured loans, when in reality they may also be buying embedded leverage, CLO exposure or redemption mechanics that are far less transparent than the headline pie chart suggests.

In that context, a vehicle can run into serious difficulty even if the underlying credit remains broadly sound. Mayer was clear that this is where the biggest dislocation is emerging, especially in the evergreen space. That diagnosis also explains why he is less alarmed than some headline writers about the state of credit itself. He does not see evidence of broad systemic failure across loan books.

What he does see is high-quality credit paired with completely broken liabilities. That distinction matters because it changes how advisers should think about risk. The issue is no longer just whether the manager can underwrite a loan. It is whether the structure around the fund can withstand stress.

Credit secondaries are built for this kind of dislocation

The appeal of secondaries, in Mayer’s telling, is that they allow investors to exploit this mismatch from a position of scepticism and flexibility. Secondary buyers can step into portfolios where other investors need liquidity, assess both the underlying credit and the fund structure, and purchase exposure at discounts that reflect not just market noise but real structural strain.

This is why Mayer describes the market as one of the only flexible liquidity sources available when private credit structures seize up. Sellers may be banks, insurers, sovereign investors or business development companies, often acting not because they believe the assets are poor but because regulation, risk settings or portfolio construction forces them to move. That is precisely what makes the opportunity compelling. The sale is often driven by the seller’s balance sheet needs rather than the intrinsic value of the portfolio being sold.

For advisers, this is a useful insight because it separates credit secondaries from a more conventional distressed narrative. Mayer is not pitching a strategy that depends on buying deeply impaired assets and hoping for recovery. He describes high‑quality portfolios sold into the secondary market because their owners face liability problems.

“It’s not about downside protection alone anymore, it’s about the liability structure around it.”

Manager selection is still everything

If the opportunity is attractive, Mayer is equally clear that it is not easy. Credit secondaries only work well if the buyer can both assess the portfolio and understand the manager who built it. In a market where many private credit firms have limited track records and the overall sector is still relatively young, that due diligence burden is high.

This is where Pantheon’s vision becomes more than just opportunism. Mayer argues that a secondary strategy is only as good as its primary platform.

To buy well in secondaries, an investor needs to know how managers underwrite, how teams behave through cycles and what their historical default and workout patterns actually look like. That is especially important in a market where the number of managers has exploded but genuine through-cycle evidence remains sparse.

He also stressed that adviser due diligence now needs to go beyond broad product labels. Track record length in evergreen vehicles matters. Sector concentration matters. Software exposure matters. Default management capability matters.

Above all, leverage matters. For Mayer, understanding a fund’s liability profile is no longer a technical footnote. It is central to assessing whether the strategy can actually deliver the stable credit outcomes investors thought they were buying in the first place.

Secondaries may offer a different kind of private credit allocation

Mayer’s final argument is that credit secondaries do not just represent an opportunistic side-pocket. They may offer a distinctly useful portfolio role. He boiled that down to three features, discounts, diversification and duration.

Buying at a discount can provide a capital gain inside an income strategy, which is rare in credit. Portfolios often span multiple managers, sectors and geographies, creating unusually broad diversification. Shorter remaining duration returns capital more quickly and lets investors recycle it into new opportunities, especially valuable in semi‑liquid structures that demand resilient liquidity management.

That is a different proposition from the standard direct lending allocation many wealth investors have come to know. It also points to Mayer’s broader view that private credit should not be treated as a monolith. Investors can stay in the safer, more boring corners of the market if they wish. But for those willing to go further into the structure of the asset class, he argues there are more asymmetric opportunities emerging.

The next big question in private credit may not be which loans default. It may be which structures break first, and who is equipped to buy the assets when they do. In that environment, credit secondaries are starting to look less like a niche and more like one of the market’s more interesting pressure valves.