KBRA released research confirming that net asset value-backed lending reached record rated issuance in 2025, with deal flow extending into early 2026 despite rising base rates and compressed spreads across private credit. The rating agency tracked $8.3B in NAV facilities it rated last year, up 41% from 2024, with average facility sizes climbing to $380M from $240M the prior year. The shift: general partners at private equity and real estate funds are now treating NAV lines as permanent capital structure, not distress financing.
The mechanics explain the adoption curve. A GP with $2.1B in unrealized portfolio value can access $900M in liquidity at 65-70% advance rates without triggering a secondary sale or early asset liquidation. The lender underwrites the portfolio companies directly, not the fund's distribution schedule, which means the facility floats independently of LP capital call obligations. Covenants tightened in 2025—KBRA now requires quarterly mark-to-market revaluations and 15% overcollateralization buffers on investment-grade-heavy portfolios, 22% on growth equity. But GPs are paying the freight: all-in pricing averaged SOFR + 425bp in Q4 2025, up 80bp from mid-2024, and lenders are still finding capacity.
This confirms what the secondaries market already showed. Lexington Partners and Ardian priced $6.2B and $4.8B continuation vehicles in 2025, the two largest such transactions on record, because LPs needed liquidity and GPs needed to hold assets beyond fund term limits. NAV lending solves the same problem with less structural violence—no LP vote, no fairness opinion, no _Wall Street Journal_ coverage. A family office LP stuck in a 2017 vintage fund can't force a sale, but the GP can lever the portfolio and return 30% of committed capital while extending the hold period on three core assets. The LP gets cash. The GP keeps the upside. The lender earns high-single-digit returns on senior secured paper backed by mark-to-market collateral.
The risk is in the lag. NAV facilities are marked quarterly, but private equity portfolios are valued by the GP's own team, reviewed by Big Four auditors who rely on DCF models and comparable transaction multiples that may be six months stale. KBRA's overcollateralization buffers are designed to absorb 15-20% NAV declines before triggering margin calls, but if software multiples compress another 30%—as they did in 2022—the GP either posts additional portfolio companies as collateral or refinances at higher cost. The rating agency noted that zero of its rated NAV facilities defaulted in 2025, but the vintage is young and the cycle hasn't turned.
Allocators should track three vectors. First, secondary fund pricing: if continuation vehicles start pricing at 12-15% discounts to NAV instead of 6-8%, that's a signal that buyers doubt GP marks and NAV lenders will follow. Second, margin call frequency: KBRA and Moody's publish quarterly surveillance reports, and any uptick in covenant amendment requests or collateral substitutions will surface there. Third, new entrant pricing: if regional banks or BDCs start offering NAV facilities at SOFR + 300bp, someone is mispricing the volatility and the repricing will be abrupt.
The $47B global secondary volume KBRA referenced in its research is a denominator, not a ceiling—NAV lending is now a parallel liquidity channel that doesn't require LP consent or public disclosure, which means the true refinancing wave is larger than reported transaction data suggests.
The takeaway
NAV lending reached $8.3B in rated issuance, up 41%, as GPs replace secondary sales with senior secured leverage at SOFR + 425bp.
nav lendingprivate creditsecondarieskbraliquiditygp finance
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