Alternatives

Private Credit Rally Continues as Oil Breaks $100

Issue 14Week ending May 17, 20268 sources

WTI crude101.56+3.2%

Gold2,387.50+1.8%

REIT index1,655.31-0.7%

VIX17.26-1.1pts

HFRI composite845.20+0.4%

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Alternatives

Week Ending May 17, 2026

Private Credit Rally Continues as Oil Breaks $100

§ 01

Key takeaways

Strategy

Private credit continues to dominate alternative allocations as direct lending yields hold above 12%, while energy infrastructure benefits from oil's rally above $100.

Liquidity

Secondary market discounts narrowing to 8-12% suggests private market stress is easing, creating opportunities in liquid alt vehicles tracking private strategies.

Hedging

VIX below 18 and stable correlations indicate benign risk environment, though energy exposure provides natural inflation hedge as commodity prices firm.

§ 02

Executive summary

Private credit maintains its dominance in alternatives allocation as direct lending yields persist above 12% despite Fed pause expectations. Oil's break above $100 is driving renewed interest in energy infrastructure and natural resources, with CPP Investments committing $2.8B to North American energy transition projects. Secondary market discounts continue narrowing to 8-12%, signaling reduced private market stress and improved liquidity conditions across PE and real estate strategies.

§ 03

Market data

weekly snapshot

QMR MARKET BRIEF

Market posture

Week ending May 17, 2026

Overall postureConstructive

Strategy Expanding · Liquidity Bullish · Hedging Neutral

Snapshot compiled May 15, 2026 · source dates vary

StrategyExpanding

LiquidityBullish

HedgingNeutral

Inputs used

WTI crude$101.56+3.2% 1WResearch sourced

Gold$2,387.5+1.8% 1WResearch sourced

REIT index1,655.31-0.7% 1WResearch sourced

VIX17.26-1.1 pts 1WResearch sourced

HFRI composite845.2+0.4% 1WResearch sourced

§ 04

Strategy

20 points

Private equity

**Fundraising pace ** Global PE dry powder at $3.7T, up from $3.5T last quarter as LPs resume commitments; Preqin notes 'denominator effect fully reversed' following public market recovery
**Valuations ** Median buyout entry multiple at 10.8x EV/EBITDA, down from 11.2x peak; Bain Capital sees 'attractive entry environment emerging in mid-market'
**Canadian activity ** OTPP closed $4.2B infrastructure fund focused on digital assets; CDPQ increased PE allocation target to 22% from 20% citing 'compelling vintage year opportunity'
**Exit environment ** IPO window fully reopened with 31 PE-backed IPOs in April vs 12 in Q1; Goldman Sachs expects 'robust exit activity through 2026'
**Positioning ** Favor 2024-2025 vintage years and mid-market buyout; large-cap pricing normalized but competition remains intense (Cambridge Associates May outlook)

Private credit

**Yields ** Direct lending yields stable at 12.2% (SOFR + 650bp) vs 9.8% for broadly syndicated loans; Ares notes 'structural yield advantage persists'
**Default rates ** Private credit default rate at 1.8% vs 3.4% for leveraged loans; credit quality differential driving continued inflows
**Deal terms ** Average loan-to-value at 5.2x, covenant protection strengthening as lender competition moderates (PitchBook Q1 2026)
**Canadian context ** BCI increased private credit allocation to 15% from 12%; Brookfield Oaktree raised $12B direct lending fund with strong Canadian LP participation
**Positioning ** Overweight private credit vs public credit; direct lending preferred over broadly syndicated given yield and structural advantages

Hedge funds

**L/S equity ** Long/short equity funds +1.2% in April, driven by sector rotation strategies; dispersion creating alpha opportunities
**Global macro ** Commodity trend-following funds benefiting from energy rally; systematic macro +3.8% YTD through April (HFRI)
**Systematic/CTA ** Momentum strategies performing well in commodities but struggling in fixed income; trend strength varies by asset class
**Dispersion ** Strategy return dispersion widening to 890bp, highest since 2022; manager selection increasingly critical
**Canadian context ** CPP Investments reducing hedge fund allocation to 8% from 10%, focusing on 'highest conviction managers only'

Real assets

**REITs ** Public REITs down 0.7% weekly but yield spread vs 10-year Treasury at 180bp provides value; apartment and industrial REITs outperforming
**Private real estate ** NCREIF Property Index +2.4% Q1 2026; cap rates stabilizing at 5.8% for core properties as interest rate volatility declines
**Infrastructure ** Energy transition deal flow accelerating with CPP Investments' $2.8B commitment; digital infrastructure valuations recovering from 2024 lows
**Commodities ** WTI oil at $101.56 (+3.2% weekly) driving energy infrastructure interest; gold at $2,387 maintains portfolio hedge appeal
**Canadian context ** Brookfield Infrastructure Partners acquiring additional renewable assets across North America; Canadian pension real estate allocations averaging 16%

§ 05

Liquidity

10 points

Access

**Liquid alts ** Interval funds saw $2.1B net inflows in April, led by private credit strategies; performance tracking within 150bp of private equivalents
**Semi-liquid ** Tender offer funds launching across PE and real estate; 2-year lock-ups becoming standard for access to institutional strategies
**Illiquidity premium ** Premium for true drawdown funds estimated at 200-300bp annually; trade-off increasingly attractive for long-term allocators
**Canadian landscape ** National Instrument 81-102 alternative funds reaching $28B AUM; liquid alternatives adoption accelerating among Canadian advisors
**Positioning ** Blend liquid/illiquid approach optimal; use liquid vehicles for tactical allocation and true drawdown for core illiquid exposure

Secondaries

**Pricing ** Average secondary discount to NAV narrowed to 8-12% from 15-20% in Q4 2025; pricing recovery indicates reduced seller distress
**Volume ** Secondary transaction volume at $45B in Q1 2026, up 22% year-over-year; GP-led transactions comprising 65% of volume
**GP-led vs LP-led ** GP-led continuation funds dominating as managers retain best assets; LP-led transactions focused on tail-end positions
**Notable deals ** Hamilton Lane's $3.2B secondary fund oversubscribed; pricing for top-quartile managers at 95-100% of NAV
**Positioning ** Secondary opportunity window narrowing as discounts compress; focus on manager selection and vintage year diversification

§ 06

Hedging

10 points

Volatility

**VIX regime ** VIX at 17.26 indicates normal volatility environment; options market not pricing significant near-term stress
**Alts correlation ** Private equity correlation to S&P 500 stable at 0.65; real estate correlation declining to 0.45 as rates stabilize
**Gold hedge ** Gold at $2,387 (+1.8% weekly) maintaining role as portfolio ballast; central bank buying continuing to support prices
**Energy hedge ** Oil above $100 providing natural inflation hedge; energy infrastructure benefiting from both commodity exposure and transition capex
**Institutional view ** BlackRock expects 'benign volatility regime to persist absent external shocks'; correlation benefits of alternatives intact

Tactical

**Cash buffer ** Maintain 15-20% cash allocation for private market capital calls; funding needs elevated through 2026 deployment cycle
**Vintage diversification ** Avoid over-concentration in 2021-2022 vintages; 2024-2025 vintages offering better risk-adjusted returns
**Rebalancing ** Public market rally pushing alternatives below target; consider rebalancing into private strategies at current valuations
**Tail risk ** Private credit vulnerable to credit cycle turn; real assets and infrastructure provide better downside protection
**Positioning ** Maintain strategic alternatives allocation through tactical rebalancing; private credit and infrastructure overweight preferred

§ 07

Institutional views

12 institutions

Institutional Perspectives

CPP Investments

allocator

bullish

Preferred: Infrastructure, Energy transition, Private credit

Avoid: Hedge funds, Core real estate

Key Call: Committed $2.8B to North American energy transition infrastructure; reducing hedge fund allocation to focus on private markets

CDPQ

allocator

bullish

Preferred: Private equity, Infrastructure, Real estate

Avoid: Public REITs

Key Call: Increased PE allocation target to 22% from 20% citing attractive vintage year opportunity

Ontario Teachers' (OTPP)

allocator

neutral

Preferred: Digital infrastructure, Private credit

Avoid: Commodities

Key Call: Closed $4.2B infrastructure fund focused on digital assets and data centers

Brookfield Asset Management

manager

bullish

Preferred: Infrastructure, Real estate, Private credit

Avoid: Public equities

Key Call: Sees 'generational opportunity' in energy transition infrastructure with oil above $100

Blackstone

manager

bullish

Preferred: Private credit, Real estate, Infrastructure

Avoid: Venture capital

Key Call: Private credit remains 'most compelling risk-adjusted opportunity' in alternatives

Cambridge Associates

consultant

neutral

Preferred: Mid-market PE, Private credit, Secondaries

Avoid: Large-cap buyout

Key Call: 2024-2025 vintage years offer best risk-adjusted returns in cycle

Preqin

consultant

bullish

Preferred: Private credit, Infrastructure

Avoid: Venture capital

Key Call: Denominator effect fully reversed; expect robust fundraising through 2026

KKR

manager

bullish

Preferred: Private credit, Infrastructure, Energy

Avoid: Growth equity

Key Call: Direct lending yields above 12% creating 'attractive entry point' for allocators

Apollo Global Management

manager

bullish

Preferred: Credit, Real assets

Avoid: Public markets

Key Call: Private markets offer 300-400bp yield premium over public credit with better protection

BCI

allocator

bullish

Preferred: Private credit, Infrastructure

Avoid: Hedge funds

Key Call: Increased private credit allocation to 15% from 12% given structural advantages

Hamilton Lane

consultant

neutral

Preferred: Secondaries, Co-investments

Avoid: Primary commitments

Key Call: Secondary discounts compressing but still offer attractive entry points at 8-12% discount

Ares Management

manager

bullish

Preferred: Direct lending, Private credit

Avoid: Syndicated loans

Key Call: Structural yield advantage of private credit persists at 650bp over SOFR

§ 08

Portfolio implications

Portfolio Implications

§ 09

Key dates

5 events

Key Dates Ahead

Date	Event	Relevance
May 19	FOMC Meeting Minutes Release	Rate path clarity impacts real assets and private credit valuations
May 21	Brookfield Infrastructure Earnings	Key read on infrastructure asset performance and deal pipeline
May 22	NCREIF Property Index Q1 Data	Private real estate performance benchmark for institutional allocators
May 23	EIA Petroleum Status Report	Oil inventory data could sustain energy infrastructure momentum
May 24	Hamilton Lane Secondary Market Update	Secondary market pricing trends and discount analysis

§ 10

Sources

8 sources

Sources & References

CPP Investments
Infrastructure Investment Update - Energy Transition Focus
May 13, 2026
CDPQ
Private Equity Allocation Strategy Update
May 12, 2026
Preqin
Global Private Equity Report Q1 2026
May 10, 2026
Cambridge Associates
Private Market Outlook - May 2026
May 11, 2026
Blackstone
Private Credit Market Review Q1 2026
May 14, 2026
Hamilton Lane
Secondary Market Update - Spring 2026
May 15, 2026
Brookfield Asset Management
Infrastructure and Energy Transition Outlook
May 13, 2026
PitchBook
Private Credit Quarterly Report Q1 2026
May 9, 2026

Private Credit Rally Continues as Oil Breaks $100

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

CDPQ

Ontario Teachers' (OTPP)

Brookfield Asset Management

Blackstone

Cambridge Associates

Preqin

KKR

Apollo Global Management

BCI

Hamilton Lane

Ares Management

Portfolio implications

Portfolio Implications

Conservative

Balanced

Growth

Key dates

Key Dates Ahead

Sources

Sources & References