The private credit sector, valued at $1.7 trillion, is experiencing a shift as major investors, including pension funds, are growing wary of rising interest rates. This caution is evident in reduced allocations and extended fundraising timelines. Concerns stem from the potential strain on borrowers' ability to meet debt obligations, exacerbated by limited private equity deal opportunities. While some investors remain optimistic about the sector's double-digit returns, others are adopting a more conservative approach, reflecting uncertainty about future interest rate movements and their impact on default risks. In this evolving landscape, prudent investment strategies that balance potential returns with risk mitigation are paramount for investors navigating the private credit market.