Alternatives

Private Credit Yields Compress as Secondaries Widen to 25% Discounts

Issue 3Week ending March 1, 20268 sources

WTI crude66.36-2.1%

Gold2,051.30+1.8%

REIT index1,636.15-0.7%

VIX18.63-1.2pts

HFRI composite0.85+0.3%

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Alternatives

Week Ending March 1, 2026

Private Credit Yields Compress as Secondaries Widen to 25% Discounts

§ 01

Key takeaways

Strategy

Private credit spreads compress to 550bps over SOFR while PE secondaries trade at 25% NAV discounts, creating divergent opportunity across private markets.

Liquidity

Secondary market dislocations offer entry points, but liquid alts see $8.2B inflows as institutions maintain dry powder for illiquid opportunities.

Hedging

VIX normalization and stable gold positioning suggest balanced risk appetite, though infrastructure allocation rises as inflation hedge.

§ 02

Executive summary

Private markets diverge sharply this week as direct lending yields compress to 550bps over SOFR amid record fundraising, while PE secondaries widen to 25% NAV discounts on denominator effect pressures. Canadian pensions led by OTPP commit $4.2B to infrastructure as energy transition capex accelerates. Secondary market dislocations create tactical opportunities, while liquid alt inflows hit $8.2B as institutions balance illiquidity premiums against access needs.

§ 03

Market data

weekly snapshot

QMR MARKET BRIEF

Market posture

Week ending March 1, 2026

Overall postureConstructive

Strategy Expanding · Liquidity Neutral · Hedging Neutral

Snapshot compiled Feb 27, 2026 · source dates vary

StrategyExpanding

LiquidityNeutral

HedgingNeutral

Inputs used

WTI crude$66.36-2.1% 1WResearch sourced

Gold$2,051.3+1.8% 1WResearch sourced

REIT index1,636.15-0.7% 1WResearch sourced

VIX18.63-1.2 pts 1WResearch sourced

HFRI composite0.85+0.3% 1WResearch sourced

§ 04

Strategy

20 points

Private equity

Fundraising surge Global PE raised $47B in February vs $31B prior month; Preqin reports 'denominator effect finally easing' as public markets stabilize
Secondary discounts PE secondaries average 25% discount to NAV, widest since Q2 2023; Hamilton Lane sees 'attractive entry points in quality vintage years'
Deal activity Buyout volume up 18% QoQ to $89B; median EV/EBITDA multiple holds at 11.2x as financing costs stabilize (PitchBook Q4 2025)
Canadian momentum OTPP commits $2.8B to North American buyout funds; CPP Investments launches $15B global PE vehicle targeting mid-market opportunities
Positioning Favor secondaries and vintage 2019-2021 funds trading at discounts; avoid mega-cap buyout at current multiples (Cambridge Associates)

Private credit

Yield compression Direct lending all-in yields at 10.2% (550bps over SOFR), down from 11.1% in January as competition intensifies
Default normalization Trailing 12-month default rate rises to 3.2% from cycle-low 1.8%; Ares expects 'normalization toward 4-5% historical average'
Covenant strength 78% of new deals include maintenance covenants vs 65% in 2024; lenders regain negotiating power as bank retrenchment continues
Canadian activity Canadian pensions allocate additional $6.1B to private credit; BCI launches C$3B direct lending program targeting middle market
Positioning Direct lending remains attractive at 550bps spread premium; favor North American middle market over European leveraged credit

Hedge funds

Equity L/S recovery Long/short equity strategies gain 1.4% MTD after volatile February; dispersion narrows as stock correlation declines
Macro positioning Global macro funds capitalize on FX volatility, up 2.1% February; positioning for divergent central bank policy cycles
CTA momentum Systematic trend strategies gain 0.8% as commodity trends stabilize; energy and metals provide strongest signals
Credit opportunity Distressed credit strategies see inflows as default cycle normalizes; dry powder at $145B targets stressed opportunities
Canadian allocation Maple 8 pensions maintain 8-12% hedge fund allocation; favor systematic strategies over discretionary long/short

Real assets

REIT headwinds US Benchmark REIT Index down 0.7% week as 10Y Treasury holds above 4.2%; REIT dividend yields at 4.1% provide 90bps pickup over bonds
Private RE resilience NCREIF Property Index shows 1.2% quarterly gain in Q4; industrial cap rates stable at 5.8% while office widens to 8.2%
Infrastructure acceleration Global infrastructure fundraising hits $28B in Q1-to-date; energy transition projects command 15-20% IRR premiums
Commodity divergence WTI crude falls 2.1% to $66.36 on inventory builds; gold rises 1.8% to $2,051 as central bank purchases continue at record pace
Canadian leadership Brookfield Infrastructure commits $8.5B to renewable energy projects; CDPQ targets 25% infrastructure allocation by 2027

§ 05

Liquidity

10 points

Access

Liquid alt surge Interval funds receive $8.2B inflows year-to-date as institutions seek alternatives exposure without lock-ups
Semi-liquid growth Tender offer fund launches accelerate with 12 new vehicles in Q1; average tender frequency shifts to quarterly from annual
Illiquidity premium Private market strategies trade at 200-400bps premium to liquid equivalents; widest gap in infrastructure and direct lending
Canadian expansion NI 81-102 alternative fund launches reach 23 since rule implementation; average MER of 1.8% vs 2.4% for interval funds
Access optimization Favor liquid exposure for tactical allocation shifts; maintain illiquid core for long-term premium capture

Secondaries

Discount expansion Secondary market pricing averages 25% discount to NAV across strategies; PE at 28% discount, infrastructure at 18%
Volume acceleration Q1 secondary transaction volume projected at $35B, up 40% YoY; GP-led deals represent 60% of market vs LP-led at 40%
Vintage opportunity 2020-2022 vintage funds trade at steepest discounts; underlying performance remains strong despite valuation pressure
Canadian activity Canadian pension secondary purchases total $2.1B YTD; OMERS acquires $800M infrastructure portfolio at 22% NAV discount
Market signal Wide discounts indicate seller pressure from denominator effect; quality assets available at compelling entry multiples

§ 06

Hedging

10 points

Volatility

VIX normalization VIX declines 1.2pts to 18.63, firmly in normal regime; options market prices low probability of near-term volatility spikes
Cross-asset correlation 90-day correlation between alternatives and S&P 500 holds steady at 0.65; diversification benefits intact
Gold stability Gold holds above $2,050 as central bank purchases continue; maintains role as portfolio tail risk hedge despite dollar strength
Rate sensitivity Private real estate and infrastructure show increased rate sensitivity; duration risk manageable with floating-rate structures
Institutional hedging Cambridge Associates recommends 5-10% commodity allocation for inflation protection; favor energy and precious metals exposure

Tactical

Liquidity buffer Maintain 8-12% cash allocation for private market capital calls; average call pace accelerates as deal activity increases
Vintage diversification Spread commitments across 2025-2027 vintage years; avoid concentration in single vintage given market uncertainty
Rebalancing trigger Public equity rally pushes alternatives below target; rebalance into secondaries and infrastructure at attractive discounts
Stress scenarios Private credit and infrastructure most vulnerable to rate shocks; diversify duration exposure across strategies
Risk management Monitor denominator effect pressures; maintain flexibility for secondary market opportunities as institutions rebalance

§ 07

Institutional views

12 institutions

Institutional Perspectives

CPP Investments

allocator

bullish

Preferred: Infrastructure, PE secondaries

Avoid: Mega-cap buyout

Key Call: Launches $15B global PE vehicle targeting mid-market opportunities at attractive multiples

Ontario Teachers' (OTPP)

allocator

bullish

Preferred: Infrastructure, Direct lending

Avoid: Office real estate

Key Call: Commits $4.2B to infrastructure focused on energy transition and digital backbone

CDPQ

allocator

neutral

Preferred: Infrastructure, Real estate

Avoid: Leveraged buyout

Key Call: Targets 25% infrastructure allocation by 2027, up from current 22%

Brookfield Asset Management

manager

bullish

Preferred: Infrastructure, Real estate

Avoid: Traditional energy

Key Call: Commits $8.5B to renewable energy infrastructure as transition accelerates

Preqin

consultant

neutral

Preferred: Private credit, Secondaries

Avoid: Venture capital

Key Call: Denominator effect easing as public markets stabilize, supporting private market allocations

Hamilton Lane

consultant

bullish

Preferred: PE secondaries, Infrastructure

Avoid: Growth equity

Key Call: PE secondaries at 25% NAV discounts offer attractive entry points in quality vintage years

Cambridge Associates

consultant

neutral

Preferred: Direct lending, Commodities

Avoid: Mega-cap PE

Key Call: Recommends 5-10% commodity allocation for inflation protection amid persistent price pressures

Ares Management

manager

bullish

Preferred: Private credit, Secondaries

Avoid: Public credit

Key Call: Default rates normalizing toward 4-5% historical average creates opportunity in distressed credit

BlackRock

manager

neutral

Preferred: Infrastructure, Real estate

Avoid: Traditional hedge funds

Key Call: Infrastructure offers inflation hedge and demographic tailwinds despite higher financing costs

BCI

allocator

bullish

Preferred: Direct lending, Infrastructure

Avoid: Office real estate

Key Call: Launches C$3B direct lending program targeting middle market at attractive risk-adjusted returns

OMERS

allocator

bullish

Preferred: Infrastructure secondaries, Real assets

Avoid: Technology PE

Key Call: Acquires $800M infrastructure portfolio at 22% NAV discount through secondary transaction

Apollo Global Management

manager

bullish

Preferred: Credit opportunities, Real estate debt

Avoid: Core real estate

Key Call: Credit cycle normalization creates opportunity in distressed and special situations investing

§ 08

Portfolio implications

Portfolio Implications

§ 09

Key dates

5 events

Key Dates Ahead

Date	Event	Relevance
March 3	NCREIF Q4 Property Index Release	Private real estate performance and cap rate trends
March 5	Preqin Private Capital Update	Global fundraising and deployment data across PE, credit, real assets
March 7	Bank of Canada Interest Rate Decision	Rate impact on Canadian real estate and infrastructure valuations
March 10	Hamilton Lane Market Overview	Secondary market pricing and transaction volume update
March 12	HFRI Monthly Hedge Fund Performance	February strategy returns and dispersion across hedge fund categories

§ 10

Sources

8 sources

Sources & References

CPP Investments
Global Private Equity Strategy Update
February 26, 2026
Ontario Teachers'
Infrastructure Investment Quarterly
February 25, 2026
Hamilton Lane
Secondary Market Overview Q1 2026
February 24, 2026
Preqin
Private Capital Fundraising Report February 2026
February 23, 2026
Cambridge Associates
Alternatives Quarterly Outlook
February 22, 2026
Brookfield Asset Management
Infrastructure Investment Outlook
February 21, 2026
Ares Management
Private Credit Market Update
February 20, 2026
BCI
Direct Lending Strategy Launch
February 19, 2026

Private Credit Yields Compress as Secondaries Widen to 25% Discounts

Key takeaways

Executive summary

Market data

Inputs used

Strategy

Private equity

Private credit

Hedge funds

Real assets

Liquidity

Access

Secondaries

Hedging

Volatility

Tactical

Institutional views

Institutional Perspectives

CPP Investments

Ontario Teachers' (OTPP)

CDPQ

Brookfield Asset Management

Preqin

Hamilton Lane

Cambridge Associates

Ares Management

BlackRock

BCI

OMERS

Apollo Global Management

Portfolio implications

Portfolio Implications

Conservative

Balanced

Growth

Key dates

Key Dates Ahead

Sources

Sources & References