Jefferies Credit Partners closed roughly €1 billion for a new private credit secondaries fund, marking one of the larger dedicated vehicles in a market segment that moved $28 billion in volume last year. The fund targets loan portfolio acquisitions and selective new origination, entering at a moment when secondary pricing for private credit has widened 250-400 basis points since early 2023.
The vehicle sits inside Jefferies' broader credit platform, which manages approximately $13 billion across distressed debt, direct lending, and structured products. The secondaries strategy arrives as private credit funds raised between 2019 and 2021 face refinancing pressure — roughly $180 billion in private credit maturities scheduled between now and end-2026, per Preqin data. Fund managers holding loans at par are increasingly willing to transact at discounts between 88-94 cents on the dollar to meet redemption queues or rebalance concentrated portfolios.
This matters because the secondary market for private credit remains structurally thin. Unlike broadly syndicated loans, which trade on platforms with daily marks, private credit portfolios require bespoke diligence and bilateral negotiation. Jefferies enters with balance sheet capacity and existing relationships across 160+ private equity sponsors, creating natural deal flow. The fund structure allows both outright portfolio purchases and preferred equity injections into existing funds — a hybrid approach that wasn't viable when secondaries volume sat below $10 bil lion annually.
Allocators should note three follow-on developments. First, secondary pricing spreads will compress if base rates decline 75-100 basis points by mid-2025, reducing the urgency for sellers. Second, Jefferies will likely compete directly with Blackstone's $4.6 billion BCSF vehicle and HPS's emerging secondaries effort for the same distressed fund portfolios. Third, the fund's dual mandate — buying existing loans and writing new ones — signals Jefferies expects primary market spreads to stay elevated above SOFR+550 through 2025, making fresh origination attractive even at secondaries fund return hurdles near 15-18% net.
The €1 billion raise took roughly eleven months, slower than the six-to-eight-month cadence Jefferies saw in 2021 for its fourth distressed fund. Limited partners allocated cautiously, requiring detailed stress testing on assumed recovery rates and holding period liquidity. Two European pension systems and one Middle Eastern sovereign fund anchored the vehicle, per sources familiar with the raise. No U.S. public pension participated, reflecting ongoing preference for liquid credit alternatives.
Jefferies now operates one of the three largest dedicated private credit secondaries platforms, alongside Sixth Street and Goldman Sachs Asset Management. The firm's credit group has returned 12-14% net annually since inception in 2004, though performance varied sharply by vintage — funds raised in 2008 and 2020 outperformed, while 2017-2018 vintages lagged due to overlevered covenant-lite exposure. The new fund's portfolio construction limits single-name exposure to 4% and caps any one sponsor relationship at 12%, tighter than previous vehicles.
The fund begins deploying in Q1 2025, with roughly €350 million already soft-circled for three portfolio acquisitions currently in diligence. One involves a €180 million slice of healthcare services loans originated between 2020-2022, now marked at 91 cents by the selling fund. Another targets a European industrial loan book with 15% of borrowers already in payment-in-kind toggle mode. Jefferies expects the fund to reach 70% deployment by end-2025 if secondary deal flow continues at current pace.
The private credit secondaries market now represents roughly 8-9% of total private credit AUM, up from 3-4% in 2019. As direct lending funds mature and redemption pressures build, that ratio will approach 12-15% within eighteen months, creating persistent bid-ask tension around asset marks. Jefferies positioned early in a cycle where liquidity provision carries premium returns — but only if portfolio selection avoids the $40-50 billion in zombie credits that won't refinance cleanly even at distressed levels.
The takeaway
Jefferies' €1 billion secondaries fund enters as private credit liquidity tightens, targeting 88-94 cent loan portfolios ahead of $180 billion in maturities through 2026.
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