Listed bonds
Burgeoning net issuance pushed debt markets to record levels in September 2026. Sovereign debt in issue rose 5.2% to $79.1 trillion, compared with a 3.6% increase in market value to $74.5 trillion, while corporate debt outstanding rose 2.6% to $40.9 trillion against just 1.3% growth in market value to $39.3 trillion. The gap reflects lower bond prices as investors have pushed yields higher, particularly at the long end of government curves. In short, more debt is being created even as existing bonds are marked lower.
Persistent fiscal deficits across major developed economies and heavy refinancing needs are keeping supply of sovereign debt high. Corporate issuance is increasingly boosted by large technology companies funding AI investment.
Increased turbulence is placing several major sovereign bond markets under stress. It has been primarily driven by macro-economic, geopolitical and fiscal concerns, even as governments are having to compete with mega-cap companies for debt-investor cash.
Private credit
[Chart 11]
Unlike most corporate bonds, where a coupon is fixed for the bond’s term, private credit overwhelmingly relies on rates that float at an agreed (relatively wide) margin above a benchmark short-term interest rate.
Also, unlike bond markets, private credit is not continuously repriced, which mutes volatility but also makes emerging stress harder to identify. Greater use of Payment-in-Kind (PIK) structures is one potential warning sign. The International Monetary Fund’s (IMF) 2026 Global Financial Stability Report acknowledges this reality, though it notes that PIK use has stabilised for now. Our survey suggests market professionals expect its use to grow. (see Focus on Private Credit – When PIK Becomes a Warning Sign)[Link to section].
High-profile defaults have raised concerns about underwriting standards, while direct lenders also have significant exposure to software companies vulnerable to AI disruption. S&P puts this at 20% of total exposure and notes these companies’ financial outlook is ‘highly uncertain’. The IMF says that payment defaults are rising from a low base and estimates that a severe rates or earnings shock could push selective defaults two to three times higher.
But, the software sector notwithstanding, we are not facing such a shock at present. S&P Global’s February 2026 report pointed to growing revenues and EBITDA for a large majority of companies with private loans, and an improved cash interest coverage ratio. Given the strength of the corporate earnings picture in 2026 so far, there is no reason to assume this positive picture has changed across the board.
We estimate that the size of private credit AUM expanded 2.5% between January and September to a record $1.38 trillion, up from Preqin’s reported $1.35 trillion figure for December 2025.
Real estate
[Chart 15]
We estimate that private real estate AUM edged up 1.1% between January and September 2026 to a record $1.514 trillion, slower than other asset classes. There are mixed signals in the market. On the one hand, MSCI reported positive property-fund returns across all regions in Q1, with office values rising for the first time since 2022 and retail, residential and industrial also performing well. On the other hand, Preqin reported a sharp fall in fundraising and weak transaction activity in Q1. Conditions improved somewhat in Q2, with fundraising recovering, although the number of direct property deals remained very low.
Higher-for-longer interest rates are still limiting a recovery in property values. CBRE expects property yields to remain broadly stable through the rest of 2026 . With buyers unlikely to pay substantially more for the same rental income, returns depend more heavily on rental growth and the income properties generate.
Read about operational value creation in real estate
Infrastructure
[Chart 13]
Following a record 2025, Preqin reported a slower pace of fundraising this year. It reached $23bn in Q1, with deployment concentrated in energy and digital infrastructure; data centres alone accounted for almost 21% of deal value. In Q2 , fundraising weakened sharply in the absence of large fund closes, but deal activity remained resilient, with renewables accounting for more than half of transactions.
We estimate that infrastructure AUM rose 4.3% between January and September 2026 to a record $1.395 trillion, supported by heavy capital requirements across energy and digital infrastructure.
Longer term, the opportunity appears to be substantial. McKinsey estimates that an astonishing $106 trillion of global infrastructure investment will be needed by 2040.