Surging Private Credit Defaults Are Driving a Secondaries Wave. But at What Cost?

In the March edition of Private Debt Investor, Robin Goldwyn Blumenthal explores how frenzied activity in the secondaries market is being driven by GPs and LPs seeking liquidity to manage portfolio risk. According to PDI’s research, credit secondaries jumped to 11% of private credit’s total fundraising in 2025. But, as Marblegate Asset Management’s Managing Partner, Andrew Milgram, notes, many of those transactions are coming at a steep discount: “Secondaries price in a wide range, with some transacting at a meaningful discount to where the asset was carried by the original investor, some as low as 65 cents on the dollar for certain segments of the market. Those interests are then marked back up to a value at or near the mark they were held at prior to the purchase by the semi-liquid funds who buy them.”

Fitch has reported that private credit defaults in monitored portfolios hit 9.2% in 2025. The question investors should be asking is whether the prices at which secondary investments are carried reflect both a liquidity discount and the risk of value impairment, or whether the secondary market is failing to recognize that many positions carry a stated NAV that does not reflect actual economic value. Further, does the depth of the discount for troubled assets appropriately reflect their actual value? Whether the practice of re-marking portfolios at pre-transaction values will survive greater investor scrutiny remains to be seen.

At Marblegate, we believe many of the companies within these portfolios will ultimately require both financial and operational restructuring, not just a change of hands to truly restore value.

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