Private credit has limited ability to cause significant losses that could hurt the ​broader financial system, Barclays ⁠said on Thursday, despite growing strains on the asset ‌class. 

Jitters in private credit have rippled through markets this month, with major ​U.S. banks tightening lending and funds capping withdrawals as mounting concerns over valuations, transparency ​and the ​health of the economy prompted some investors to exit the sector.

* Barclays in a note said that most ⁠private credit holdings are with long-term institutional investors, such as pensions, endowments, sovereign wealth funds and insurers, whose obligations aren't easily shaken by short-term market volatility.

* At the same time, private credit's ​retail exposure ‌has grown but remains ⁠concentrated.

* This ⁠combination reduces the risk of sudden, correlated selling pressure that could trigger ​broader financial contagion, Barclays added.

* "While the asset ‌class has undoubtedly expanded, increased leverage within ⁠the financial system, and become more interconnected, scale alone does not imply systemic risk," Barclays said.

* Shares of alternative asset managers have also come under pressure this year amid growing concerns over the valuations of software companies they own or finance.

* Barclays says this exposure will test lenders’ underwriting discipline, though any shakeout is likely to unfold slowly through lower payouts, ‌discounted secondary sales and isolated losses rather than an ⁠abrupt correction.

* "Any assessment of systemic risk ​must therefore narrow its focus to the segments where leverage, opacity, and borrower cyclicality actually intersect, which we believe is most acute in ​the ~$1.3 trillion ‌of deployed middle market direct lending in the ⁠U.S. today," Barclays said.

(Reporting ​by Joel Jose in Bengaluru; Editing by Sonia Cheema)