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Private capital in 2026: Foundations for a changing market
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Lower financing costs, improving buyer-seller alignment and pressure on sponsors to transact may create a more constructive environment for private capital this year. Recent experience, however, has reinforced the limits of forecasting. Against this backdrop, we focus on four enduring foundations that we believe matter regardless of how the macro environment evolves.
While several concrete factors support strong deal activity in 2026—including lower interest rates and improving M&A momentum—we approach the year not through prediction, but through discipline and experience. The lesson from recent years is clear: outcomes are increasingly driven less by forecasting macro scenarios and more by consistent investment discipline, experience and the ability to manage through uncertainty.
Key considerations for 2026 are:
- Seize the constructive backdrop—with discipline: Lower interest rates and rising M&A may support greater deal activity, but a focus on quality assets, disciplined underwriting and resilient business models remain important to mitigate potential risks.
- Avoid the crowd: U.S. traditional middle market lending, particularly in sponsor-backed deals, has arguably become less crowded in recent years; offering moderate leverage, compelling yields and an attractive diversification opportunity for investors looking to complete their private credit exposure.
- Value full-spectrum capabilities: Faced with unpredictable conditions, sponsors will increasingly seek trusted capital partners who consistently provide flexibility, a full range of creative solutions and certainty of execution, regardless of the macro backdrop.
- Navigate accelerating manager differentiation: Relative performance will come into sharper focus as returns diverge further, leading to haves and have-nots in an increasingly discerning fundraising market.
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This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or an investment strategy, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her financial professionals.
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Important information on risk
Investing involves risk; principal loss is possible. Debt or fixed income securities are subject to market risk, credit risk, interest rate risk, call risk, derivatives risk, dollar roll transaction risk and income risk. As interest rates rise, bond prices fall. Below investment grade or high yield debt securities are subject to liquidity risk and heightened credit risk. Foreign investments involve additional risks, including currency fluctuation, political and economic instability, lack of liquidity and differing legal and accounting standards. Please note investments in private debt, including leveraged loans, middle market loans, and mezzanine debt, are subject to various risk factors, including credit risk, liquidity risk and interest rate risk.
This information represents the opinion of Nuveen, LLC and its investment specialists and is not intended to be a forecast of future events and or guarantee of any future result. Information was obtained from third party sources which we believe to be reliable but are not guaranteed as to their accuracy or completeness. There is no assurance that an investment will provide positive performance over any period of time.
Nuveen, LLC provides investment solutions through its investment specialists. Churchill Asset Management is a registered investment advisor and an affiliate of Nuveen, LLC. This information does not constitute investment research as defined under MiFID.
