Capital Markets Outlook 2025: Key Trends

2. Private Credit in Demand from Borrowers and Investors

In 2025, issuers and investors will likely continue to drive private credit’s growth. Compared to public syndicated loans, private credit is attractive to some borrowers for its tailored and more flexible structures and to investors for enhanced returns, diversification and the ability to deploy capital in scale. Private credit assets under management may reach $2.8 trillion by 2028, which would double 2022’s asset level, according to Preqin.⁴

Morgan Stanley helps companies choose the right market based on their borrowing needs and investor interest. “We spot situations and quickly identify whether the public/syndicated or private markets will offer the best execution for our clients,” Shah says.

Some issuers have been raising debt in private markets to help refinance their existing loans. In October 2024, Morgan Stanley helped Canadian gaming company Gateway Casinos & Entertainment raise $1.3 billion of private debt to refinance its loans and issue a dividend to shareholders. In March 2024, Morgan Stanley also helped Rockefeller Capital Management raise $850 million of debt in private markets to refinance its loans.

3. Wave of Capital Spending on AI and Energy

As enterprise and consumer demand for artificial intelligence (AI) continues to grow, companies need to raise capital to invest in data centers and energy infrastructure. Capital markets will play a crucial role in facilitating these developments, through solutions that include private credit and tax equity, in which investors provide capital to a project in exchange for its tax benefits.

Companies are using tax equity as a source of funding for U.S. projects in sectors such as renewable energy, which can receive tax credits from the U.S. government for advancing environmental objectives. In July 2024, Morgan Stanley served as sole lead provider of tax equity for Intersect Power’s $837 million in financing that included construction debt, tax equity and term debt financing to build battery energy storage systems in Texas.⁵

Among private credit issuances in the energy space, Morgan Stanley worked with Tennessee Valley Authority in October 2024 to raise $720 million of financing through secured Holdco notes (which offer collateral protection to lenders) to help finance a new facility with natural gas-driven combustion turbine generators. “Deals like these highlight the capital needs for the significant growth in power demand,” Shah says.