The macroeconomic climate and increasing competition from other private credit firms are viewed as the top risks facing senior operational executives in the industry, an exclusive survey by Alternative Credit Investor has revealed.
The research, conducted at the Alternative Credit Investor COO Summit 2026 last month, found that these two risks tied for the top spot, followed by concerns over worsening credit quality.
These factors were cited as greater headwinds than other potential challenges, including reputational risk, increasing competition from banks, the interest rate environment and tighter regulation.
The survey also showed that most chief operating officers expect default rates to edge higher over the next 12 months.
Commenting on the survey results, Simon Tang, head of US at Carta LP portfolio analytics, told ACI that the findings highlight “just how challenging the current climate is for private credit”.
“The industry faces significant geopolitical, macroeconomic and competitive headwinds, just as it is undergoing a structural shift towards retail capital,” said Tang. “To continue its growth trajectory, private credit must bolster transparency into underlying risk, structures and performance and educate retail investors on liquidity and redemption rights.”
Read more: Alternative Credit Investor COO Summit 2026: Watch the video!
Regarding the macroeconomic climate, senior operational executives told ACI that market uncertainty remains one of the key challenges they are facing, much of it driven by political instability.
This ties into recent conversations between managers and ACI. For example, an emerging manager in the process of fundraising for its first private credit fund said that, following the start of the war in Iran, institutional investors have become slower to commit capital and are delaying decisions due to the heightened uncertainty caused.
This, coupled with concerns over the impact of artificial intelligence (AI) on software companies and fears around deteriorating credit quality, has created further anxiety among new investors that has become an operational issue for private credit firms.
Commenting on macroeconomic conditions, competition and credit quality as the top risks highlighted in the survey, Raluca Pop, senior vice president of global sales at TresVista, told ACI that the findings align with what the firm is seeing across its client base.
“Firms are responding by sharpening their analytical infrastructure with more frequent portfolio stress testing, tighter valuation cadences and greater rigour around credit monitoring,” she said. “The firms navigating this well are the ones that have invested in execution capacity ahead of the cycle turning.”
However, some managers in the industry have pointed out that the current macroeconomic environment is also creating opportunities, particularly in distressed debt.
On a more positive note, the survey also revealed that, despite concerns over the future of the software industry and rising redemptions among US business development companies, the majority of respondents (86 per cent) believe the wealth channel has a future in alternative credit.
Read more: Inside the ACI COO Summit: AI, regulation and operational change
The AI road
AI emerged as one of the summit’s defining themes, with ACI’s survey reflecting a similar trend. The vast majority of respondents (83 per cent) said they believe AI will be moderately or extremely beneficial to their business going forward.
“With 83 per cent of executives also foreseeing AI as beneficial to their businesses, this technology is the key to boosting clarity in the industry,” Tang told ACI. “In a market becoming more complex by the day, deploying AI to analyse data and unstructured documentation in private credit will grant limited partners faster and more consistent data insights when allocating to private credit, enabling them to more accurately assess exposures and make more informed investment decisions.”
However, 100 per cent of operational executives surveyed believe the technology will reduce jobs in alternative credit.
This article originally appeared in the June edition of the Alternative Credit Investor magazine.
