How Large Is Private Credit’s Total Addressable Market, Really?

The most common misapplication of the TAM label appears in direct lending, where the opportunity set is often defined as the combined size of the broadly syndicated loan (BSL) and high yield (HY) bond markets. We view this as a clear categorical error: It conflates current stocks with substitution flows, implicitly assuming borrowers are indifferent between public and private channels and that private capital can contest the entire outstanding balance.

However, it is actually the flow of new financing demand from borrowers willing to pay for certainty of execution, confidentiality, and flexibility that matters. Under normal conditions, large, established issuers – where most of the supposedly addressable dollars sit – appear to have little incentive to raise capital from private markets.

Of course, the substitution flow from public to private markets isn’t zero, and jumbo direct loans from single large lenders can, at times, displace syndicated deals (BSLs) from groups of lenders. A better way to frame this within the TAM debate is as a contested boundary between public and private markets, a boundary whose width changes with market conditions.

By contrast, less precise TAM definitions treat that boundary as fixed and fully capturable. By the same logic, one could argue that small businesses and public companies alike could represent the TAM for private equity. This is clearly incorrect. For direct lending, the relevant metric was never the TAM, but rather the marginal penetration of different lenders (and types of lenders) into the wider market, along with the gradual back-and-forth drift of this overlapping boundary.

ABF is different. The TAM concept genuinely applies because ABF is grounded in credit-risk transformation rather than substitution flows; the underlying cash flows exist regardless of who finances them. Namely, there are identifiable balance sheets being vacated – typically those of banks and specialty lenders that want to free capacity.

Put differently, ABF can be understood as a manufacturing process whereby the same collateral is tranched into different risk layers. This allows us to map the financeable universe and estimate what share can realistically migrate into ABF portfolios.

To be clear, analytical rigor still matters. For example, counting trillions of conforming mortgages securitized by U.S. government-sponsored entities (GSEs), such as Fannie Mae and Freddie Mac, materially overstates the opportunity. The GSEs are not balance-sheet-constrained lenders; they are chartered entities with an explicit federal mandate. No private fund – regardless of its funding advantages – can realistically compete for that collateral. Therefore, what may migrate into ABF portfolios is typically the non-agency mortgage market: jumbo loans, nonqualifying mortgage loans, and other residual risks that banks and mortgage lenders are shedding.

Simply put, when applied correctly, the ABF addressable market is not everything that exists, but rather the displaced slice where private capital tends to have a genuine and durable advantage.

A more basic question remains surprisingly unsettled: how big is the overall private credit market currently? Estimates span a wide range because “private credit” is defined inconsistently, often by blurring direct lending with the broader universe, conflating assets under management (AUM) with TAM, and mixing invested exposure with dry powder.

To ground the discussion, we triangulate across Preqin, PitchBook, and company disclosures and estimate global private credit AUM at roughly $3.2 trillion in total, comprised of $2.4 trillion of AUM in drawdown funds (inclusive of dry powder) and roughly another $800 billion in assets held in semi-liquid vehicles.

It also underscores the need to separate AUM from “opportunity set” measures, particularly in asset-based finance, where headline TAM metrics can materially exceed the stock of privately held assets.

Here is a useful way to think about the long-term opportunity set for private credit, and ABF specifically: Start with the major pools of U.S. lending and exclude those portions that have already migrated to institutional capital markets through securitization or long-term ownership by buy-and-hold investors.

The largest subcategory is residential mortgages. While there is roughly $13 trillion in loans outstanding, about $10.1 trillion has already been securitized through agency and non-agency residential mortgage-backed securities (RMBS), according to data from the Federal Reserve and the Securities Industry and Financial Markets Association (SIFMA). This leaves approximately $3 trillion on bank and non-depository balance sheets.

Commercial real estate (CRE) represents another $4.9 trillion of loans, and within that total, roughly $1.8 trillion has been securitized through commercial MBS and multifamily MBS, while life insurers hold an additional $800 billion, according to data from the Mortgage Bankers Association, the National Association of Insurance Commissioners (NAIC), and SIFMA. That leaves about $2.3 trillion still primarily funded by banks and specialty lenders that could, in theory, migrate into the ABF ecosystem.

Consumer credit – including credit cards, unsecured loans, auto loans, and other receivables – totals approximately $5.2 trillion, according to Federal Reserve data. Around $1.2 trillion has been securitized through the asset-backed securities market, leaving roughly $4 trillion outside public securitization markets.

Equipment finance and leasing represents another $1.4 trillion of loans and leases, according to the Equipment Leasing and Finance Foundation. Of this, only $200 billion – $300 billion has likely been securitized, leaving about $1.1 trillion still funded by banks and specialty finance companies.

Beyond traditional lending markets, there is also a growing universe of contractual cash-flow assets, including aircraft leases, franchise and licensing agreements, litigation finance, music royalties, and intellectual property. While it is difficult to size precisely, these markets likely represent roughly $500 billion worth of collateral, the bulk of which is $300 billion in aircraft leases globally, according to the Airfinance Journal and McKinsey.

Taken together, this suggests there is roughly $25 trillion worth of loans and contractual cash-flow assets in the U.S. Of that, about $13 trillion has already been securitized, and insurers hold another $1.5 trillion – $2 trillion.

Against that backdrop, how much have managers captured in ABF assets under management (AUM) today? A precise estimate is hard to get for two reasons. First, there is no common definition: some managers market a broad figure folding investment grade (IG) private placements and structured products, while others report narrower and more precise figures.

Second, the ABF slice inside affiliated insurance balance sheets is often not broken out. Some firms bury insurance inside the ABF figure, while others exclude the ABF held within their insurance arms. Using the AUM of those firms that report a narrow and precise figure as a proxy would imply a third-party, non-captive ABF AUM figure in the vicinity of $200 billion. To be clear, this is better understood as a lower bound than a total since it excludes specialist managers.

These numbers imply that the remaining pool that could plausibly migrate from traditional intermediaries to the asset management industry is roughly $9 trillion – $10 trillion. In practice, however, the addressable market is likely smaller. We expect banks will continue to retain high quality loans, particularly given recent regulatory relief. In addition, some assets remain operationally difficult to transfer. Therefore, based on our research and calculations, a more realistic long-run private credit opportunity or TAM is probably closer to $6 trillion – $8 trillion.

In other words, once you exclude assets that are already securitized, held by insurers, or housed in dedicated ABF vehicles, the remaining migration opportunity is comparable in size to the entire U.S. investment grade corporate bond market. That is indeed large, but it’s an order of magnitude smaller than the $25 trillion of loans and contractual cash flows outstanding in the U.S.