In a wide-ranging conversation, Antares’ Seth Painter explains why investor selectivity is rising, how CLO structures are evolving, and why he expects 2026 to be a breakout year.
ABF Journal Editor-in-Chief Rita Garwood sat down with Seth Painter, senior managing director at Antares and chair of the firm’s operating committee, for a detailed discussion on private credit, the shifting investing environment, and the expanding role of private credit CLOs. Their conversation covered market conditions, structural forces shaping growth, investor trends, and how the industry is preparing for the years ahead.
Rita Garwood: To start us off, can you tell us a little about yourself?
Seth Painter: I’m a senior managing director at Antares. I lead the capital solutions team and also chair the operating committee.
The State of the Market
Garwood: How would you characterize the state of the private credit market as we head into the new year?
Painter: Recent headlines suggest signs of stress because of a few credit stories, but we don’t see that in our own portfolio. Our book continues to perform well and validates our long-term strategy of building a defensive, highly diversified portfolio.
We are seeing more dispersion across managers, though. Investors are becoming more selective and more educated, and they’re prioritizing managers with scale, experience through credit cycles, and real workout capabilities.
Fundraising overall has pulled back, but it has increased for managers with the attributes I just mentioned. Heading into 2026, investors know private credit belongs in their portfolio — they’re just more cautious about who they invest with.
Structural Forces Shaping Growth
Garwood: What structural forces — regulation, bank retrenchment, LP appetite — are having the biggest impact on private credit growth today?
Painter: All three have mattered at different times.
Regulation came first. After Dodd-Frank in 2010, banks faced a more restrictive lending environment, which opened the door for private credit firms to fill the gap in the middle market.
Bank retrenchment followed. In 2022, macro uncertainty and geopolitical risks led banks to step back from the upper middle market, again creating room for private credit managers with scale — including Antares — to step in with attractive terms.
Then there’s LP appetite, which has grown steadily. Investors like the combination of current income and the illiquidity premium, with comparable or lower loss rates. Private credit has outperformed bank loans and high yield on relative value.
The wealth channel has grown quickly too. BDC AUM is up about 35% per year over the last five years, ETFs are buying private credit, and retirement plans are evaluating private assets.
So the timing really has played out in the order you listed: regulation, then bank retrenchment, and now rising LP demand.
CLO Structures and Innovation
Garwood: As CLOs become more prominent in private credit, what innovations or refinements are emerging compared to traditional BSL CLOs?
Painter: The biggest difference is that most private credit CLOs are still funding vehicles for their parent fund, so they’re built to match the strategy of that fund. They tend to be low-levered because that aligns with the parent portfolio.
BSL CLOs are different — the CLO is essentially the fund and is levered to the maximum allowed by rating agencies and debt investors.
So the motivation behind issuance is the key distinction.
The Role of CLO Issuance
Garwood: How critical will CLO issuance be to sustaining private credit’s expansion over the next few years?
Painter: CLOs are crucial, especially for performance in times of stress. There’s a reason BSL CLOs make up roughly 65% of the buyer base for bank loans: the structure is resilient, non-mark-to-market, and avoids forced liquidations.
Those features matter even more in private credit, where loans are less liquid.
For conservatively constructed, diverse portfolios like ours, CLOs are the best funding source, and history shows the structure outperforms in stressed environments. They also provide stable returns.
So yes, CLO issuance will be a big part of the market’s continued growth.
Investor Trends
Garwood: How has the investor mix in private credit CLOs evolved?
Painter: We’ve seen more investors who previously focused only on BSL CLOs now buying private credit CLOs. The investor base is more educated and sees they can get a yield premium while benefiting from less leverage and more conservative structures.
Another big development is equity. Historically, CLO equity was captive to the parent fund. Now more managers are raising third-party equity for their private credit CLOs. That reflects the growth in the market, new managers, and a broader investor base.
CLO Equity and Portfolios
Garwood: How does CLO equity fit into investor portfolios today, and what risk-adjusted return dynamics stand out?
Painter: CLO equity fits best in portfolios that don’t require mark-to-market on securities backed by less liquid assets.
And “CLO equity” can mean many things — it might be levered two times or seven-plus times, so it can fit different investor profiles.
At today’s stage of the market, origination strength and staying fully deployed matter more than ever. Avoiding losses is also key.
Investors should be highly selective. Managers need scale, strong workout capabilities, and deep understanding of CLO mechanics.
Evolving Manager–Investor Relationships
Garwood: As the market matures, how do you expect the relationship between private credit managers and CLO investors to evolve?
Painter: It has already evolved quite a bit. Investors are far more educated than they were four or five years ago, and that’s positive.
They now tier managers based on scale, experience, track record, and workout capabilities. That’s a sign of a maturing market.
Transparency and Data
Garwood: Private credit CLOs have historically been less transparent than broadly syndicated structures. How is Antares addressing that?
Painter: We’ve heard the comment before, but it’s surprising to us. We’ve always welcomed transparency because it’s essential to educating and growing the investor base.
Since we originate loans directly, we have direct access to companies and private equity sponsors — meaning real-time information.
During COVID, for example, we were talking directly with CFOs of portfolio companies and getting real-time updates, unlike public credit investors who were waiting on quarterly financials.
We actually think private credit investors can and should get more transparency than BSL investors, and that’s our goal.
Mainstream Adoption
Garwood: What developments would signal that private credit CLOs have reached a more mainstream status within leveraged finance?
Painter: We may already be there. Media coverage has expanded, conferences dedicated entirely to private credit CLOs are now common, and investment banks have research teams focused on the space.
The market was even rebranded; what used to be “middle-market CLOs” shifted as managers began originating and securitizing loans to larger companies.
Private credit CLOs now account for about 20–25% of issuance, up from around 10% a few years ago.
In many ways, they’ve already reached mainstream and will continue to be a preferred funding source.
Looking Ahead
Garwood: If you had to predict one headline for the private credit or CLO market in 2026, what would it be and why?
Painter: We usually prefer not to have major headlines — we like steady growth. But if I had to predict one, I’d expect a very busy origination year, possibly exceeding 2021 levels.
We thought 2025 would be stronger, but macro uncertainty, especially around tariffs, delayed deals. Still, the drivers are in place: inflation is much more controlled, private equity firms are under pressure to return capital, and they want to transact.
We just need a period of stability and predictable rates. If that happens, 2026 could be exceptionally active, leading to another record year for private credit CLOs.