Private credit firms are increasingly shifting from traditional cash-flow lending toward asset-backed finance using collateral that now includes intellectual property, data centers, and energy infrastructure. 

Despite the US ABF market totaling $5.5 trillion, private credit holds only a small share and is partnering more frequently with banks to expand. The recent bankruptcy of First Brands has raised concerns about how well lenders understand the risks in ABF, especially as more unfamiliar assets require precise valuation in a downturn. 

Demand for digital and energy infrastructure is driving ABF growth, with data center financing alone expected to jump sharply by 2028. Yet the sector has not been tested under high interest rates or recessionary conditions, prompting warnings from regulators about potential systemic risks. 

Finsum: Look for asset return correlation in stress scenario to test your demand for private markets.