The Compression Problem and the Access Problem

Private credit in two hemispheres, and what McKinsey’s 2026 data means for Africa

Warren Wheatley CA(SA), Founder and Chief Executive Officer, Africa Bitcoin Corporation

McKinsey’s 2026 Global Private Markets Report describes private credit the way you describe an industry that has won. The asset class has grown roughly tenfold since 2009 to comfortably above USD 1.7 trillion, institutional conviction remains firm, and McKinsey puts the long term addressable opportunity in the United States alone at more than USD 30 trillion. Read closely, however, the report is not a growth story. It is a maturity report, and the numbers describe a market now managing the consequences of its own success.

The compression problem

The signals are consistent and they all point the same way. All in new issue yields fell to approximately 9.3 percent in 2025 from 10.5 percent the year before, tracking a decline in base rates rather than any improvement in credit. Yet leverage did not fall to match: new issue transactions averaged 4.9 times EBITDA, barely moved from 5.0 times in 2024 and 5.2 times in 2023. Lenders are accepting less yield without demanding less risk.

Documentation tells the same story. Covenant lite structures rose to 21 percent of direct lending deals in 2025, up from just 4 percent in 2023, as terms at the upper end of the market drifted toward the borrower and began to resemble the broadly syndicated packages that private credit was once meant to improve upon. Early indicators of stress are visible beneath the surface: payment in kind income and the share of loans marked below 90 have both ticked up, though neither has reached levels that would alarm a seasoned lender. To sustain growth, managers are reaching into asset based finance, credit secondaries, and above all the wealth channel, where retail capital flowing into alternative structures doubled to roughly USD 204 billion in two years.

McKinsey names the durability of that wealth channel capital as the central question for 2026. The honest translation of the entire report is simpler. There is now more capital in developed market private credit than there are well priced, well protected deals to absorb it. Compression of yield, erosion of covenant, and the hunt for new asset classes are not separate trends. They are three symptoms of one condition: a crowded market.

The mirror image

Viewed from Johannesburg, Lagos or Nairobi, that condition is almost unrecognisable, because the African constraint is its exact inverse. The problem here is not too much capital chasing too few sound borrowers. It is too little institutional capital reaching a borrower base that is vast, productive and structurally underserved.

The International Finance Corporation estimates the small and medium enterprise finance gap in Sub Saharan Africa at around USD 331 billion. More than half of the continent’s formal micro, small and medium enterprises cannot access the finance they need to grow, and Sub Saharan Africa carries among the highest proportions of fully credit constrained firms of any region in the world. These businesses are not marginal. They are the majority of employment and a large share of output on the continent.

The implication for a lender is the opposite of the McKinsey picture. Spreads in African private credit are wide because capital is scarce, not because risk has been mispriced. Lender protection can be strong because the lender has pricing power and there is no queue of competing direct lenders bidding the same deal toward covenant lite. The return is structural, not cyclical, and it does not depend on a falling rate environment to remain attractive. Where the developed market manager is defending margin, the African originator is setting it.

How this shapes the way we build ACOF

This is the gap that the Africa Credit Opportunities Fund was built to occupy, and the McKinsey data clarifies why our positioning matters. We are not competing for the syndicated mid market borrower that already has a dozen lenders at the table. We originate where there is little competition and real security, lending into the productive SME economy that traditional banks have never served well and that global private credit has not yet reached. The discipline that developed markets are now being forced to relearn, on pricing, on covenant, on asset selection, is the discipline that scarcity has always required of us.

The second lesson concerns capital itself. McKinsey’s anxiety about the wealth channel is fundamentally a question of whether redeemable, semiliquid capital will stay invested through a full credit cycle. Illiquid private loans funded by capital that can run is a structural mismatch, and it is the fault line the report keeps circling. Our answer is deliberate. A listed balance sheet provides permanent capital that does not face redemption requests, and pairing that base with a Bitcoin treasury gives Africa Bitcoin Corporation a funding model designed to lend through a cycle rather than retreat into one. Permanent capital is the correct match for illiquid credit, and it is a structural advantage precisely where developed market vehicles are most exposed.

The asset based frontier, and where Bitcoin fits

The most telling detail in the report is where developed market managers are going for growth. Asset based finance is identified as the frontier, the move from lending against a company’s cash flows to lending against specific, securable assets. We agree with the direction entirely, and we would observe that Bitcoin backed lending is the purest form of asset based finance that exists. The collateral is transparent, globally fungible, and can be verified and liquidated continuously, without recourse to a court or a slow enforcement process. It is security that works the same on a Sunday night in Mpumalanga as it does on a Monday morning in Manhattan.

Africa, with the fastest rate of digital asset adoption in the world, is the natural market for this product rather than an afterthought to it. Our Bitcoin Backed Lending programme, anchored by a secured wholesale facility, is asset based finance built deliberately for borrowers and savers that the conventional system has overlooked. It is the dual engine in practice: a Bitcoin treasury and a pan African private credit platform reinforcing one another, each addressing a gap that the other helps to close.

Same asset class, opposite problem

The developed market private credit story, told plainly in McKinsey’s numbers, is about defending returns in a field that has become crowded. The African story is about building the field in the first place. It is the same asset class confronting opposite problems, and the contrast is the opportunity. For a disciplined, permanently capitalised, security first lender, the conditions that McKinsey’s data implies but does not name are not somewhere in the developed world’s future. They are present on this continent now.