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Most assets (58%) in distressed-debt funds are equity, according to MSCI Private Capital Transparency Data, as of March 31, 2025. Equity instruments also made up nearly 45% of the assets in mezzanine and generalist private-credit funds over the same period.

Outside of senior lending, private-credit managers often take equity stakes when originating loans. Debt-to-equity restructurings also play a role, though we’ve not yet seen enough loan distress to move the market. For investors, the takeaway is clear: Equity exposure is a significant driver of private-credit performance.