Bad luck to all the bankers who thought private credit jobs would make them rich
Once upon a time, private credit pay was rising. Today, this is no longer the case.
When Blackstone published its second quarter results a few weeks ago, "realized performance compensation" (carried interest) it paid to employees in its private credit and insurance segment was down 51% year-on-year in the first half.
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Blackstone is not alone in crimping private credit pay. The latest report from Wall Street compensation consultancy Johnson Associates, predicts performance compensation in private credit firms will be flat to down 10% this year. That's both better and worse than in May, when Johnson was predicting that private credit performance pay would be down between 2.5% and 7.5%. Johnson Associates' predictions are based on detailed interviews with people in the market.
While people working in private credit are probably having their pay squeezed, people working in public debt markets are probably having their pay inflated. Johnson Associates thinks bonuses for debt capital markets (DCM) professionals in investment banks will increase by 5% to 10% this year. This less than the 20% to 30% bonus hikes Johnson Associates is predicting for equity capital markets bankers and equities markets, but it is an increase at least.
The increase is worth noting because it wasn't so long ago that DCM bankers were leaving banks to work for private credit firms. In early 2025, Macquarie even closed its 80 person US DCM team. In the years after the pandemic, private credit was a very sexy place to work. In the middle of 2025, Goldman Sachs even began distributing carried interest-type payments to its senior bankers to stop them from leaving.
There's no need for that now. Private credit is not the source of riches it once seemed. Ares, the private capital firm which has 66% of its $671bn of assets invested in private credit, is swiftly diversifying into private equity. Blue Owl shares are still down over 50% from their 2025 peak.
To the extent that there's a moral in the story, it's that you should not chase shiny jobs. Debt capital markets (DCM) bankers are in fashion; private credit people are not. Speaking to us earlier this year, Johnson Associates' figurehead Alan Johnson said private credit professionals will need to adjust to their new pay reality. "They thought it would go to the sky," he reflected. Instead it's falling back to earth, and doing so harder with each passing quarter.
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