#United States #New York #private credit #Cliffwater #CDLI

Cliffwater Direct Lending Index Data Shows Continued Strength in Private Credit Performance

The private credit sector continues to demonstrate remarkable resilience and stability, as evidenced by the latest results from the Cliffwater Direct Lending Index (CDLI) for the year 2025. This index, established as the first widely accepted benchmark for private credit, reports an impressive annual return of 9.3%. Such performance is not just a fleeting occurrence; the CDLI has delivered an average return of 9.5% over the past 20 years, with only a single year marked by negative returns, which was in 2008.

In 2025, interest income, which accounted for a substantial 10.4% of total returns, played a crucial role in achieving this level of performance. Payment-in-kind (PIK) interest income remained stable at 0.7%, representing approximately 7.3% of total income. Additional indicators of credit health, such as non-accruals and realized losses, not only stabilized but also showed improvements, maintaining levels that are significantly below the historical averages.

Stephen Nesbitt, the CEO of Cliffwater and creator of the CDLI, commented on this data, emphasizing the reliability and consistency of private credit. He stated, "In this asset class, 'boring' is exactly what you want—steady, reliable performance. Despite the significant concerns voiced regarding the safety of private credit towards the year's end, our data indicates those fears are unfounded. We view this asset class as an 'all-weather' solution and a safe haven amidst broader market fluctuations."

The CDLI was created not only to measure the performance of private loans but also to provide insights into their investment characteristics. Since its first publication in 2015, with historical data reconstructed back to 2004, it has become the longest-running index tracking the private credit market. Its establishment has paved the way for Cliffwater’s comprehensive suite of direct lending indices, including the CDLI-P, which tracks the performance of perpetual business development companies (BDCs), and the CWBDC index, which monitors public BDCs.

As of now, the CDLI encapsulates roughly 21,000 directly originated U.S. middle-market loan holdings, with total assets amounting to an impressive $549 billion. This broad coverage underscores not only the importance of the index but also its role in the financial landscape.

About Cliffwater

Founded in 2004, Cliffwater LLC is an independent alternative investment adviser and fund manager, specializing in delivering unique insights and access to alternative investments. Through their innovative research, proprietary indices, and evergreen private markets funds, Cliffwater strives to reshape how alternatives are perceived and engaged with in the market. The firm has received citations in leading industry publications, resulting in the establishment of the CDLI and its suite of related indices. Notably, Cliffwater has become one of the largest providers of alternative investment solutions for the wealth management sector, with a platform currently boasting $46.5 billion in net assets as of February 28, 2025.

Given the ongoing volatility in broader markets, the results of the CDLI reinforce the perception of private credit as a robust asset class. Investors looking for stability alongside growth may find the insight from Cliffwater’s extensive research and consistent performance a compelling reason to consider this alternative investment strategy.