Jefferies sees credit secondaries backlog building into 2027

Credit secondaries activity reemerged through the third quarter and into the fourth, and a growing backlog is forming for the first quarter of 2027, according to a Jefferies private capital note published Nov. 9. The note, titled "Beyond the Headlines: Why Credit Secondaries Are Regaining Momentum," draws on a first-half 2026 credit secondaries buyer survey and Jefferies estimates.

Jefferies says the second-quarter 2026 slowdown now looks temporary. GPs and LPs that delayed processes are returning to market, supported by clearer valuations, deeper buyer engagement and firmer pricing, according to the note. Jefferies describes the return as more than pent-up supply: buyers are better equipped to underwrite volatility, and sellers are bringing portfolios and price expectations closer to buyer demand.

Uncertainty over marks was a primary reason activity slowed. With first- and second-quarter marks in hand and a third-quarter data point due, buyers can better separate temporary mark-to-market noise from fundamental credit deterioration, the note says. For an allocator comparing a dedicated credit secondaries vehicle with a blind-pool commitment, the note's argument is that seasoned portfolios let buyers evaluate known borrowers, payment histories, current yields and the GP's valuation discipline.

Late 2025 and early 2026 saw several large transactions that only the deepest pools of capital could absorb, according to Jefferies. More recent opportunities have featured $250 million to $500 million of equity, a size within the target investment of newer platforms, specialist credit investors and established secondary buyers with dedicated credit strategies. In some cases, broader participation has created increased competitive tension, which the note ties to improved execution confidence and pricing for high-quality portfolios managed by marquee GPs.

The bid-ask spread that widened earlier in 2026 has begun to narrow, according to the note. Competition has improved pricing for seasoned, performing senior secured portfolios with strong asset quality, GP quality and transparency. The market remains discerning: buyers continue to scrutinize stressed credits, uncertain valuations, limited GP access and challenged sectors.

Jefferies frames the shift as credit secondaries becoming a larger and more strategically important part of private markets. The backlog forming for the first quarter of 2027 is the next test of whether the 2026 second-quarter pause stays temporary.