The Bank for International Settlements published an analysis finding that surging demand from software and technology firms materially drove the post-2020 expansion of direct lending, the largest segment of private credit. Private lenders were well placed to finance these asset-light firms because they can underwrite loans against recurring cash flows and intangible assets. US technology firms’ private credit borrowing exceeded USD 1 trillion in 2025, accounting for 44% of the market, while global direct lending reached almost USD 2.5 trillion. Private credit grew fastest in US cities with a large pre-pandemic technology sector and was positively associated with subsequent firm formation and employment, although the analysis does not establish causation. The findings suggest that easing bank regulation alone is unlikely to shift lending materially back to banks. Financial stability risks remain unresolved because the share of technology borrowers with negative earnings nearly doubled after 2020, leverage increased among profitable borrowers and loan spread dispersion narrowed, potentially indicating weaker differentiation of borrower risk.
2026-09-14Bank for International Settlements
Bank for International Settlements finds technology demand drove post-2020 private credit growth
The Bank for International Settlements found that technology firms’ demand for financing drove much of private credit’s post-2020 growth, with their borrowing exceeding USD 1 trillion and reaching 44% of the US market in 2025. Private credit growth was associated with greater firm formation and employment, but weaker borrower fundamentals and narrower spread dispersion raise questions about risk pricing and financial stability.