Sun Life Capital Management has reported seeing “persistent institutional demand” for private credit, which is driving “strong activity” in the private credit market.
“We continue to observe strong activity in the private credit market, driven by persistent institutional demand,” the firm said in its latest update for Q2 2025.
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“As competition compresses spreads in public markets, we’ve seen investors increasingly turning to private credit for its yield premium.
“However, growing competition in the private space has, in some cases, reduced the spread differential between public and private markets.
Read more: Indian private credit market sees record $9bn investment in H1
“Managers seeking transactions representing potential value opportunities might need to consider bilateral and smaller club deals over broadly syndicated opportunities.”
The firm said it sees investment grade private credit as a strategic allocation for the future.
Read more: Partners Group forecasts further rebound in private markets activity for Q3
“In yield-challenged environments, investment grade private credit offers a meaningful spread premium over comparable public investment grade bonds – often in the range of 75–200 basis points.
“Investment grade private credit represents not just a tactical opportunity, but a strategic allocation positioning that can increasingly align with the evolving needs of institutional investors.”
