Private credit is entering a more complicated phase, and Brookfield Asset Management (NYSE:BAM) sees an opportunity for investors willing to go beyond traditional corporate lending.
In a new August 2026 white paper, Brookfield argues that the private credit market is expanding into increasingly specialized corners of finance, where deep industry knowledge and sophisticated underwriting could give investors an edge.
"The expansion in private credit has increased the need for specialized expertise to fully understand asset-level and structural credit risk," Brookfield’s credit experts stated in the report.
The shift comes as private credit has grown into a much broader market. While direct lending remains a core strategy, investors are increasingly exploring opportunistic credit, real-asset credit and asset-backed finance. Specialty finance accounted for roughly 20% of private credit fundraising in 2025, up from just 4% in 2024, according to data cited by Brookfield.
Brookfield sees parallels between today’s private credit market and the evolution of public credit. What began as a relatively standardized market eventually expanded into more specialized areas, including high-yield bonds, senior loans and collateralized loan obligations.
Private credit, the firm argues, could be following a similar path.
"The private credit evolution mirrors the path seen in early days of public markets," the report noted, as investors move toward opportunities where returns can be driven by "expertise, structuring and credit selection."
That specialization is showing up across several parts of the market.
In opportunistic credit, investors can target distressed debt, rescue financings and bespoke capital solutions, particularly when traditional lenders are unwilling or unable to provide financing. Brookfield says these transactions can require expertise in restructuring, asset valuation and recovery analysis.
Real estate debt is another area where Brookfield sees specialized knowledge becoming increasingly important. Rather than simply assessing a borrower’s creditworthiness, investors need to understand property-level cash flows, leases, development risks, market conditions and the value of the underlying collateral.
Infrastructure debt offers another potential growth area. Brookfield points to financing needs across renewable power, utilities, transportation, energy infrastructure and data centers. The firm cites an estimate that roughly $100 trillion in infrastructure investment will be needed globally by 2040.
Then there is asset-backed finance, where the underlying assets and their cash flows—not simply the borrower’s balance sheet—form the basis for underwriting.
That complexity may be precisely what creates an opportunity.
"Excess return can stem from understanding risks that are difficult to analyze, service or structure," Brookfield said.
But the move into specialized credit isn’t without risks. Brookfield warns that payment-in-kind structures can sometimes signal financial stress, while concentrated sector exposure, liquidity mismatches and looser underwriting standards could leave investors vulnerable.
The result is a private credit market where simply having capital may no longer be enough. As the asset class becomes more fragmented, Brookfield argues that investors will increasingly need managers with the data, operating experience and specialized underwriting capabilities to understand risk at the source.
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