Global private credit AUM has reached $1.7 trillion. Nigerian commercial banks have retreated from mid-market corporate lending. The SEC's 2025 Rules and PenCom's revised investment regulation have, for the first time, opened a credible pathway for institutional private credit deployment in Nigeria.
1. The global context: why private credit is the asset class of this decade
Private credit — broadly defined as non-bank lending to corporates and projects through privately negotiated instruments — has been the fastest-growing segment of alternative assets globally for the past decade. AUM in global private credit reached $1.7 trillion by end-2024 [1]. In H1 2025 alone, the asset class raised $124 billion in new capital, placing it on pace to exceed the full-year 2024 total [2].
The structural driver is the post-Global Financial Crisis reconfiguration of bank lending. Basel III and successor prudential regulations progressively increased the capital cost for banks of holding leveraged corporate loans. Banks retreated from direct corporate lending — particularly to mid-market companies without investment-grade ratings. Private credit managers filled the gap, offering borrowers speed, certainty of execution, and structural flexibility that syndicated bank loans cannot provide, in exchange for a yield premium.
The asset class is now diversifying beyond its direct-lending origins. Specialty finance — credit backed by contractual receivables, real assets, or structured cash flows — grew from 10% to 18% of LP mandates in 2024. Asset-backed finance (ABF), a subset of specialty finance, represents a $5.5 trillion global market in which private lenders currently hold less than 5% share [3]. CalPERS — the US's largest pension fund with $500 billion in AUM — has signalled a preference for ABF as it moves to double its private debt allocation.
2. The Nigerian private credit vacuum
Nigeria's formal credit market is dominated by the banking sector, but commercial banks have systematically withdrawn from the corporate lending segments where private credit managers are most active globally. The reasons are structural.
Government crowding-out. FGN securities have historically offered yields of 18–25% per annum with zero risk weighting under CBN prudential rules. For a commercial bank, the risk-adjusted return on a sovereign bond significantly exceeds the return on a mid-market corporate loan with full credit risk and capital charge. The result: Nigerian pension funds hold over 65% of their assets in FGN securities; Nigerian banks hold a disproportionate share of their asset base in government paper. Private corporate credit — the financing of growing Nigerian businesses — is chronically underserved.
NPL constraint. Nigerian commercial banks have elevated non-performing loan ratios — persistently above the CBN's 5% threshold in certain periods — driven by energy sector exposures, retail credit, and SME lending. This constrains willingness to originate new corporate credit, particularly to sectors without hard collateral.
Tenor mismatch. Nigerian commercial banks fund primarily through short-tenor deposits (3–12 months) and interbank placements. Lending long — 3–7 year corporate facilities — creates balance-sheet tenor mismatches that banks without long-term funding sources struggle to manage. Private credit managers, funding through closed-end funds with 3–5 year lock-ups, do not face this constraint.
3. The regulatory opening: SEC 2025 Rules and PenCom
BusinessDay reported in February 2026 that the SEC's 2025 Rules have introduced a regulatory framework allowing private companies to issue debt securities to qualified investors — expanding the formal instruments available for private credit deployment in Nigeria beyond bilateral loan facilities to include rated debt securities [5]. Previously, private credit in Nigeria operated primarily through bilateral loan agreements outside the formal securities regulatory framework, and was therefore inaccessible to pension funds bound by PenCom's investment regulations.
The SEC's 2025 framework, combined with PenCom's September 2025 Revised Regulation on Investment of Pension Fund Assets [8], creates — for the first time — a structured pathway for private credit instruments to be issued, rated, distributed to PFAs, and held within their regulated portfolios.
4. Structuring private credit in Nigeria
The most fundamental structuring decision is currency denomination. Naira-denominated instruments offer higher nominal yields (25–35% per annum for senior credit to investment-grade corporates) but carry inflation and devaluation risk. USD-denominated instruments offer lower nominal yields (8–14%) but require USD-revenue borrowers — limiting the addressable market to exporters, dollar-billing services businesses, and infrastructure assets with USD offtake. The emerging solution — increasingly adopted in Nigeria — is parallel fund structures: a Naira vehicle for domestic pension capital and a USD vehicle for international DFI and institutional LPs [4].
Collateral structures tailored to Nigerian borrowers include legal mortgages over real property (subject to Governor's Consent timeline risk), debentures over company assets, domiciliation of sales proceeds or receivables to a dedicated escrow account, personal and corporate guarantees, and share pledges over operating subsidiaries. Receivables domiciliation — requiring the borrower's customers to pay directly into a lender-controlled escrow — is the most reliable security mechanism in practice. It converts unsecured corporate credit risk into secured cash-flow risk and materially improves recovery in stress scenarios.
Tenors typically range from 12 to 60 months. Short-tenor facilities dominate working capital and trade finance. Medium-tenor facilities are appropriate for capex and equipment. Long-tenor facilities (48–72 months) require DFI participation, real asset security, or PPP cash-flow certainty. Amortising structures are strongly preferred; bullet maturities require higher credit quality and stronger security.
5. Pricing: what returns are realistic
Yield expectations must be set against two benchmarks: the FGN bond yield (the risk-free equivalent) and the CBN's Monetary Policy Rate, currently on a phased reduction from 27.5%.
Indicative current pricing: FGN bond yield ~18–22% p.a.; investment-grade corporate (BBB equivalent) 22–26%; high-grade mid-market 26–30%; leveraged / sub-investment grade 30–38%; asset-backed specialty finance (DRIVE/ACQUIRE model) 25–32%; infrastructure project finance (Naira, PPP) 22–28%; USD-denominated senior facility 8–14% (investment grade) and 14–22% (sub-investment).
These yields reflect Nigeria's current rate environment. As the CBN easing cycle continues and the formal market deepens with comparable transaction data, spreads over risk-free rates are likely to compress — consistent with the global pattern of spread compression as markets mature.
6. Where is the institutional appetite?
Nigerian PFAs — unlocked but cautious. With ₦27.45 trillion in AUM at December 2025 and a regulatory framework explicitly permitting alternative investment, PFAs represent the largest potential source of domestic private credit capital [6,8]. Yet private equity — the proxy for alternative allocation — accounts for just 1.06% of total pension AUM. PFA caution is not irrational: limited internal alternatives expertise, illiquidity management against monthly outflows, and the recapitalisation pressure (₦20 billion minimum capital required by December 2026) [9] are all consuming bandwidth.
International DFIs — the anchor capital. IFC, AfDB, FMO, British International Investment, Proparco, and the US DFC are the most active international anchors. Their participation provides first-loss or subordinated capital, signals creditworthiness, and provides ongoing monitoring. DFI capital in Nigerian private credit is not concessional in the conventional sense — DFIs price at or near market rates. Their value is structural.
International family offices — emerging allocators. The appeal is straightforward: yield premiums of 10–15 percentage points above comparable developed-market instruments, with diversification from assets uncorrelated to the S&P 500 or European bond markets. Private capital activity in Africa rose 60% in deal value in Q3 2025 to $5 billion from $3 billion in Q2 [11], signalling real and growing international appetite.
7. The APOYO Private Credit Fund thesis
GTCM's APOYO Private Credit Fund sits at the intersection of the structural opportunity and the institutional requirement. APOYO's direct-lending mandate targets Nigerian and West African corporates and infrastructure concessionaires with proven revenue streams, identifiable cash flows, and asset security — the subset of the market where disciplined underwriting can generate 25–30% gross Naira yields with managed credit risk.
APOYO's structural differentiator is the proprietary origination pipeline from within the GTH group. GTFL's DRIVE and ACQUIRE receivables, GTMB's mortgage book, and GTDC's development financing represent captive deal flow accessible with full information from origination — not at market price after competing with other lenders. The origination advantage is structural, not replicable through capital allocation alone.