Goldman Sachs leans into asset-backed finance as private credit shifts away from “direct lending,” Yahoo reports

Private credit investors may need to rethink where the next wave of returns will come from, Goldman Sachs is indicating, with a reported argument that asset-backed finance is poised to play a bigger role than traditional “direct lending.” The view, reported by Yahoo Finance, suggests that financing structures tied to underlying assets could better match how large infrastructure and industrial buildouts are being funded.

The Yahoo report frames the opportunity around end-use demand. It points to financing needs related to AI data centers, power infrastructure, and U.S. domestic manufacturing. In that context, asset-backed finance can mean loans or credit facilities where repayment is supported by the cash flows or residual value associated with specific, identifiable assets rather than relying only on a borrower’s broader credit strength.

Direct lending is typically understood as private loans made directly to companies, often to fund operating needs or corporate investments, with lenders underwriting the borrower’s ability to repay. Asset-backed finance, by contrast, is organized around collateral or asset-linked revenue streams, which can change how risk is assessed and how lenders are protected if circumstances deteriorate.

Goldman’s message, as summarized by Yahoo, comes at a time when private credit has been under intense scrutiny as borrowers and sponsors seek financing and as investors evaluate how much risk they are taking on in increasingly competitive deal markets. The shift toward asset-backed approaches, if it gains traction, could reflect a broader attempt to find more “observable” sources of credit support in an economy where many of the largest capital projects are tied to tangible bottlenecks like power availability and land-use constraints.

For the finance sector, the reported emphasis on assets rather than borrower-only underwriting also matters for how capital markets intermediaries and lenders position themselves. If infrastructure-adjacent cash flows and collateral structures gain prominence, firms with strong origination and risk-management capabilities for structured lending may be better positioned to compete for mandates in areas like energy upgrades and industrial capacity expansion.

Still, the Yahoo report does not spell out detailed metrics such as target volumes, fee expectations, or a timetable for where Goldman expects asset-backed finance to scale. It also does not provide deal examples, specific product categories within asset-backed finance, or commentary on how the firm’s positioning would translate into changes in portfolio composition or investor marketing.

That lack of granularity is important because “asset-backed finance” can cover a wide range of structures, from secured lending backed by receivables or equipment to more complex financing tied to project assets. Without those specifics, it is not possible to determine how Goldman is defining the opportunity, or whether it is pointing to particular segments where underwriting standards differ meaningfully from traditional direct lending.

What to watch next is whether Goldman or other large credit providers elaborate on the argument with more detail. Investors will likely look for clearer definitions of which asset-backed structures are being prioritized, as well as whether the firm’s stance is accompanied by concrete examples, new offerings, or changes to how it advises private credit participants on risk and allocation.