KBRA releases research examining trends across the net asset value (NAV) landscape. Record KBRA-rated NAV issuance in 2025, followed by continued deal activity in 2026, underscores the evolution of NAV lending from a niche liquidity tool into an established component of fund finance. Broader sponsor and lender adoption has supported standardization, expanded market participation, and encouraged new structures that continue to adapt to shifting general partner needs while preserving credit discipline.

KBRA NAV loan ratings have remained broadly stable since our prior NAV report (see Private Credit: NAVigating the PE Landscape—NAV Loans Still Perform), despite extended hold periods and weaker asset mixes in certain older-vintage private equity (PE) funds. Of the 279 KBRA surveillance reviews of PE and secondary NAV loans from 2020 through 1H 2026, 95% of rating actions were affirmations and 4% were upgrades. This credit stability reflects structural protections, such as cash sweep mechanisms, other lender controls, and sponsors’ disciplined approach to portfolio and liquidity management.

This KBRA report updates our view of NAV loan issuance, structural trends, and rating performance with a focus on PE and secondary fund transactions, issuance drivers, market evolution, and the rating and structural factors shaping credit rating outcomes. For the purposes of this report, KBRA excludes NAV facilities backed by credit funds. Although these facilities are conceptually similar to PE and secondary NAV loans, they differ in terms of collateral composition, repayment behavior, and issuance drivers (see Private Credit: A Breakout Year for Rated Note Feeders and CFOs for more detail on credit funds).

Key Takeaways

• KBRA-rated NAV loan issuance reached a record $23 billion across 38 transactions in 2025. Cumulative rated issuance since 2018 totaled over $82 billion across 157 transactions through 1H 2026.
• All negative rating actions from the start of 2025 through 1H 2026 (two downgrades and four negative watch placements) were taken on older-vintage PE NAV transactions experiencing delayed realizations, concentration risk, idiosyncratic issues, or amendment-triggered tail-end risk. In contrast, positive rating actions (four upgrades and four positive watch placements) were limited to secondary transactions, which benefited from broader investment diversification, market activity, and deleveraging.
• PE NAV loans continue to primarily be rated BBB+ or A- at issuance, although initial ratings in 2025 were weighted toward the BBB category, marking a shift from prior periods when the A category was dominant. This change largely reflects market-driven structural changes, portfolio composition, and manager-related considerations. In contrast, the secondary NAV rating distribution has remained broadly consistent in the A category, although KBRA assigned its first A+ rating to a secondary NAV loan transaction in 2025.
• A total of 20 ratings were withdrawn from 2025 through 1H 2026 as a result of repayments from portfolio proceeds or opportunistic refinancings. KBRA views these repayments as evidence that NAV loans are functioning as designed.
• Market evolution is expanding the investor base and broadening issuance opportunities through structures that include delayed draw components, hybrid collateral packages, portfolio construction rights, soft maturity mechanisms, and loan tranching.
• Greater lender familiarity and proven NAV loan performance have supported spread compression. We have also observed more transactions repricing at lower spreads following portfolio de-risking, deleveraging, and improved collateral performance.

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Recent Publications

• Private Credit: NAVigating the PE Landscape—NAV Loans Still Perform
• Private Credit: A Breakout Year for Rated Note Feeders and CFOs
• Private Credit: In Middle Market Direct Lending, Cash Is King
• Private Credit: Deep Dive on AI and Software
• Private Credit: Q1 2026 Middle Market Compendium: Stability Despite March Madness

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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