How Tokenized Private Credit is Reshaping Institutional Portfolios

Background:

At DigiFT, I wrote this article as part of a comprehensive content marketing strategy to promote iSNR, the Invesco US Senior Loan Strategy token.

Format

Blog article | Published 11 March 2025 here

Private credit has emerged as one of the fastest-growing alternative asset classes, attracting institutional capital at an unprecedented rate. What was once a niche market has now evolved into a mainstream investment strategy, offering diversification, stable income, and downside protection.

But what is fueling this growth? And what challenges do investors face when allocating capital to private credit?

The Private Credit Boom: A Market on the Rise

Private credit, also referred to as non-bank lending, has expanded from $1 trillion in 2020 to an estimated $1.5 trillion at the start of 2024, with projections to reach $2.8 trillion by 2028.


Market Value of Global Market Portfolio

Several factors have contributed to this rise:


Asset Class Yields (as of 31 December 2024)

What Are Institutional Investors Looking for in Private Credit?

As more investors enter the private credit space, not all opportunities are created equal. Institutional investors prioritize:

Challenges in Private Credit Investing

While private credit presents strong opportunities, investors must navigate several challenges:

The Future of Private Credit

The evolution of private credit markets is ongoing, and certain key trends are shaping the next phase of institutional adoption:

Tokenized private credit now represents the fastest-growing and largest share of total tokenized real-world assets (RWAs), significantly outpacing other asset classes such as U.S. Treasuries and corporate bonds.


Total RWA Value

Source: RWA.xyz, March 3, 2025

Bringing Institutional-Grade Private Credit On-Chain

As private credit continues to gain traction among institutional investors, new financial structures are emerging to address traditional challenges such as liquidity constraints, high entry barriers, and limited transparency. One of the most promising innovations in this space is tokenization.

Tokenization is the process of digitizing financial assets and representing them as blockchain-based tokens. In the case of private credit, this means investors can gain exposure to traditionally illiquid credit strategies in a more flexible, transparent way.

Some of the key benefits include:


Tokenized Private Credit in Action

In response to this evolving landscape, Invesco has partnered with DigiFT to bring a tokenized private credit strategy to institutional and accredited investors. Through this partnership, DigiFT launched the Invesco US Senior Loan Fund (iSNR)—a token that tracks the performance of a private credit strategy managed by Invesco.

Invesco is one of the world’s largest asset managers, overseeing $1.9 trillion in assets as of January 2025. With over 30 years of experience in private credit, Invesco is recognized as a leader in institutional-grade senior secured loan strategies.

This collaboration provides accredited and institutional investors with on-chain access to a private-side senior loan strategy managed by Invesco. Unlike traditional private credit funds, which often require multi-year lockups, iSNR introduces daily liquidity, offering greater flexibility and accessibility to investors while maintaining exposure to institutional-grade credit.

This move aligns with a broader industry trend of bringing private credit on-chain. Other firms, such as Apollo, have also entered the space, launching initiatives like the Apollo Diversified Credit Securitize Fund (ACRED).

ACRED is a tokenized private credit fund with quarterly liquidity significantly improving redemption cycles compared to conventional private credit structures.

These developments mark a paradigm shift in private credit investing, as tokenization continues to enhance liquidity, transparency, and efficiency for institutional investors.


What’s Next?

Private credit is no longer an alternative investment on the sidelines—it has become a core allocation for institutional portfolios. As financial innovation continues, tokenization is set to reshape how investors access private credit, unlocking liquidity, transparency, and efficiency in an asset class historically defined by lock-ups and complex structures.

For institutional investors seeking stable, risk-adjusted returns with capital preservation, private credit—particularly senior secured loan strategies—continues to attract institutional interest. And with tokenization now enabling new levels of access and liquidity, the future of private credit investing is only just beginning.