Goldman Sachs Asset Management expects a “more favourable” M&A environment will stimulate greater demand for credit financing and also drive increased demand for mezzanine solutions.
As long as the supply of credit remains robust, spreads will stay range bound, the asset manager added.
The observations were made during the Goldman Sachs Asset Management 2026 Investment Outlook media roundtable yesterday (17 November).
Read more: Goldman Sachs: LPs bullish on private credit and alternatives
According to the asset manager, private credit continues to present attractive value “as it still generates higher yields than public markets”, pointing to historically lower default rates compared to syndicated loans.
“As deal activity accelerates and interest in investment grade private credit grows, particularly asset-backed lending, private credit will be an important source of financing,” said James Reynolds, global co-head of private credit at Goldman Sachs Asset Management.
“Risk-adjusted returns are important. In the event of an eventual credit cycle, strong origination pipelines, experience through credit cycles and scaled platforms should differentiate GP performance.”
Within private equity, Goldman Sachs pointed out that as deal activity rises in private markets, it will provide limited partners (LPs) with new data to evaluate manager track records as they allocate new capital to existing and potential new relationships.
The asset manager suggested that general partners (GPs) will need to “strategically identify growth areas that exceed overall economic growth, potentially shifting in geographic focus”, with the pursuit of higher-growth sectors expected to continue in 2026.
Read more: GSAM: “New alts generation” emerging
Speaking at the media roundtable, Michael Bruun, global co-head of private equity at Goldman Sachs, noted that dealmaking activity is accelerating, “with strong capital markets and lower financing costs as strong tailwinds”.
“Going into 2026, we expect to see continued LP interest in secondary investments at attractive entry points, providing a shorter duration than their primary private equity investments,” added Harold Hope, global head of vintage strategies at Goldman Sachs Asset Management.
“Secondary funds and continuation vehicles will continue to be critical sources of liquidity to GPs and LPs as the market works through a backlog of exits.”
Goldman Sachs also forecast “a possible rebound” in real estate, amid expectations for additional rate cuts in many markets.
Following a pick-up in transaction activity in 2025 driven by liquid financing markets and the need to generate distributions, the asset manager believes transaction activity will accelerate next year.
“With a lower cost of capital, real estate looks compelling, but sector and property selection are crucial,” said Jim Garman, global head of real estate at Goldman Sachs Asset Management.
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