Jefferies Credit Partners closed a €1 billion private credit secondaries fund targeting loan portfolio acquisitions and selective new lending. The vehicle arrives as private credit managers confront duration mismatches between three-year fund lives and five-to-seven-year loan maturities.
The fund will purchase existing loan books from direct lenders seeking exits before natural maturity, then selectively underwrite new positions where Jefferies identifies mispriced risk. The structure allows Jefferies to avoid the worst of vintage risk while maintaining deployment optionality. Pricing on secondary loan trades has widened to discounts of twelve to eighteen points in recent quarters, creating entry opportunities that primary lending no longer offers. The firm declined to specify target returns but industry participants expect low-teens net IRRs given the discount-entry strategy.
The timing reflects two structural shifts in private credit markets. First, the explosive growth in direct lending since 2021 created a cohort of funds now facing LP redemption windows with portfolios still locked in term loans. Early vintages underwrote at aggressive valuations with minimal covenants, and many sponsors now prefer selling at a discount rather than marking down through maturity. Second, the gap between secondary bid-ask spreads and primary loan yields has compressed to under 150 basis points, making secondary acquisition nearly as attractive as new origination without the relationship-building costs.
Jefferies positions the fund as liquidity provision, but the real edge is information asymmetry. Secondary loan books trade with limited disclosure, and Jefferies' existing credit desk relationships provide visibility into borrower health that external bidders lack. The fund can cherry-pick portfolios where internal models show better outcomes than seller marks suggest. That advantage compounds in middle-market lending, where borrower financials remain opaque and covenant-lite structures leave lenders with minimal interim reporting.
Operators should track secondary transaction volume in private credit, which crossed $18 billion in disclosed trades during 2024, up from $11 billion the prior year. If that figure reaches $30 billion in 2025, it signals distressed exits rather than portfolio rebalancing. Watch for pricing dispersion between investment-grade-adjacent senior loans and unitranche deals to second-lien sponsors. The former still trade near par; the latter have begun moving at discounts exceeding twenty points in selective industries. Jefferies' fund size suggests the firm expects sustained deal flow through mid-2026, which implies limited recovery in primary market conditions before then.
The fund will begin deploying capital in Q2 2025, with Jefferies targeting ten to fifteen portfolio acquisitions before adding new origination. That cadence indicates they expect the secondary opportunity to persist for at least eighteen months.
The takeaway
Jefferies' €1B secondaries fund reflects structural illiquidity in private credit, with loan discounts now wide enough to justify dedicated capital.
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