26 Trends Affecting Capital Markets in 2026

On this blog, we have commented quite a number of times regarding a number of trends affecting our capital markets—many of which have been a factor since the early 2000s and which have become more pronounced since the adoption of the Sarbanes-Oxley Act and related reforms.  For example, we have noted the decline in the number of U.S. public companies, and the rising significance of the private markets.  A report earlier this fall in the New York Times DealBook (Oct. 25, 2025) notes that private assets have more than doubled over 12 years, to $22 trillion in 2024 from $9.7 trillion in 2012.  The article notes that companies are staying private longer, waiting an average of 16 years to go public, 33 percent longer than a decade ago.  Since the change in administration, enhanced retail access to the private markets, or to the perceived attractive returns associated with private market assets, has been a focus of policymaker attention.  Of course, this is but one of several important conversations that likely will continue to influence markets in this coming year—below, we expand on this, and share some additional perspectives (all from just one lawyer’s, not banker’s, vantage point) on other trends.

The (continued and growing) importance of private markets.  As noted, private markets continue to grow in size and importance.  This shows no signs of abating.  Companies across a range of industries generally are able to raise funds in the private markets in successive exempt offerings.  The investors that participate in the private markets have expanded from angel investors and venture capital funds to include private equity funds, private capital funds, sovereign wealth funds, hedge funds, and family offices, among others.  But for biotech or life sciences companies, most companies are able to defer public offerings and remain private longer.  To the extent that a private company considers an IPO, it is motivated to do so for reasons other than raising significant amounts of capital.  Regulatory changes likely will only serve to accelerate the growth of the private markets.

Private companies are larger and only getting larger and more highly valued; private funding rounds are getting bigger and also the structures used are becoming more complex.  The structure of private investments is becoming much more complex.  Perhaps this is not surprising given that the range of investors in the private markets has changed.  Also, the capital structures for private companies are much more complicated than they once were given that private companies are more mature, have larger businesses and often have bank and other debt.  There are more “structured” investments in the private markets.  This is a trend that’s likely to continue.  There are at least 1,249 private companies globally, a slight 2% increase year-over-year, valued by venture capital firms at $1 billion or more.  Unicorns have a cumulative valuation of over $4.3 trillion as of 2025.  The 55 largest private companies in the world now have a combined valuation of $2.8 trillion.

Private placements and the private markets are, in many respects, becoming more public.  Private companies often need to provide liquidity opportunities to early investors as well as employees.  Many do so as a recruitment and retention tool and do so regularly.  So, the stock-based compensation of private companies is becoming more “liquid.”  More private wealth channels and high net worth investors seek out opportunities to invest in private companies through special purpose entities.  Interests in these special purpose entities also are traded to an extent on private secondary markets.  Secondary private placements, whether through continuation vehicles (for venture and private equity investors), or through private secondary markets also are making private securities more “liquid.”  In recent months, several financial institutions have completed transactions in which they have acquired platforms that enhance their capabilities to distribute private securities to their high net worth clients.  This is a trend that is likely to continue.  In addition, more and more investment banks have introduced equity research coverage of private companies.  Finally, more investment banks, as well as other financial entities, are willing to provide margin loans or other extensions of credit against restricted securities—even if the underlying securities are subject to transfer restrictions.  Again, rendering these securities more “liquid.”

Tokenized interests to provide access to private companies.  Particularly for non-U.S.  persons, providers outside the United States are offering to provide tokenized instruments that purport to provide interests in, or access to, the securities of private companies or exposure to the economic returns associated with certain unicorns.  More alternative “access” products are likely to emerge.

Section 4(a)(2) private placements will remain more significant than Rule 506(b) offerings.  To the extent that investment banks act as placement agents in connection with private placements and/or PIPE transactions, they will continue to prefer to rely on the statutory private placement exemption.  This obviates the need for bad actor due diligence, and given that the placement agent generally will offer and sell only to institutional accounts, QIBs and/or institutional accredited investors, reliance on Section 4(a)(2) is quite reasonable.

Enhanced retail access to the private markets through registered funds and permanent capital vehicles.  If we consider likely regulatory reforms, including the initiatives to provide greater access to the private markets to retail investors, we would anticipate that this may occur through registered funds.  In turn, this is likely to lead to:

• Increased growth of continuation vehicles;
• Increased growth of evergreen, or semi-liquid, fund vehicles, such as interval funds and tender offer funds;
• Development of more hybrid vehicles, like statutory UITs, statutory REITs, interval BDCs, etc.;
• Continued investment by insurance companies in the private markets, and also by private market participants in insurance companies; and
• Partnerships between traditional fund sponsors and alternative capital providers to roll out new permanent capital vehicles for high net worth and for retail investors.

Investment grade, or 4(a)(2), debt private placements find new investors.  The U.S. or European private placement market is often referred to as the “insurance” private placement market because the majority of the purchasers historically have been insurance companies.  In recent periods, however, private credit investors increasingly have been evaluating and participating in investment grade private placements, particularly in those related to AI and data centers, infrastructure and energy, metals, mining and other sectors.  Insurance companies generally settled these with physical certificates.  However, with the influx of private credit purchasers, more of these transactions are being documented as 144A-qualifying in order to be able to settle through DTC or Euroclear/Clearstream with the assistance of a settlement agent.  This too is a trend that’s likely to continue.

Equity market trends.  For companies that are already public, raising capital has changed.  Public offerings are less public, and more private.  This is only going to become more pronounced with the ability to submit more registration statements for confidential review.

• Reliance on CMPOs.  For almost all companies, the traditional, marketed “follow on” offering is a thing of the past.  To the extent that a company conducts a firm commitment underwritten public offering, it almost invariably is structured as a confidentially marketed public offering, or CMPO.  Maybe there is an entire day of public marketing, but more often than not, it will be only a few hours or a half-day of “public” marketing.
• ATMs instead of traditional follow-on offerings.  At-the-market offerings, or ATMs, have swallowed up most of the regular way follow-on offering activity.  Companies, especially life sciences, REITs, utilities and energy companies, tend to rely on ATMs with lower fees to raise capital.  Of course, ATMs have become more complicated.  Companies now include more banks.  Generally, all of a company’s lenders are included in a company’s ATM program.  The ATM program may have a complex sequencing—with the company rotating the order of the distribution agents, so every distribution agent has an opportunity to participate.  The company may seek to add a “forward” component to its ATM.
• PIPE transactions have become “special use” tools.  PIPE transactions remain an important financing alternative in volatile markets.  However, now that smaller reporting companies have more flexibility to use shelf registration statements, PIPE transactions are not as popular as they once were.  Nonetheless, a PIPE transaction may be the best alternative to raise capital in connection with an acquisition, or in connection with a significant private equity investment in a company that is being recapitalized or restructured.  Or, in other special situations.
• Block trades.  If a company wants to do a larger deal, it may use its ATM to do so.  A reverse inquiry opportunity may come through the issuer’s ATM and be structured as a block trade pursuant to the ATM program.  Or, the distribution agent also may provide research coverage on the company and be a market maker, and may make it known that the company would be receptive to blocks.
• Rule 144 trades for selling stockholders.  Investment banks seem to have a distinct preference for executing sales for selling stockholders (even those who have a resale registration statement) as Rule 144 sales.
• Share repurchases.  The politicization of share repurchases, the proposed additional disclosure by public companies regarding their share repurchase activity and the excise tax relating to share repurchases all seem to have done little to temper share repurchase activity.  Share repurchase programs seem to be alive and well.  We expect that share repurchase activity will remain high.

Debt trends.  Consistent with 2025, debt issuance likely will remain high.

• Investment grade issuance is likely to remain at elevated levels.  Issuance levels reached historic levels in 2025.  Issuance levels in 2026 likely will continue to be high given that issuers face maturity walls and must refinance.  Increased liability management transactions are possible in 2026.  During 2025, many frequent issuers funded in a range of currencies/markets—we would anticipate that this trend will continue in order to achieve greater funding diversification.  The reverse Yankee issuance trend that became so notable and significant in 2025 also likely will continue.
• Convert issuance levels also are likely to remain high.  Not all of the issuers that issued converts during the pandemic period have yet refinanced, so we’d expect to continue to see new convert issuance in 2026 that is motivated by the need to refinance.  We continue to see convert issuance accompanied by anti-dilutive (or offsetting) transactions in the issuer’s own securities.
• Short-term funding is likely to remain a focus.  Financial institutions likely will continue to focus on short-term funding (commercial paper) and asset-backed commercial paper.
• CRT.  Larger financial institutions likely will continue to evaluate credit risk transfer transactions to address their risk weighted assets.
• The return of repack vehicles and conduits.  Repack vehicles have returned for a number of reasons.  In some instances, institutional investors that would like access to a particular return may have exceeded their permitted concentration limit (or exposure) to the financial institution obligor.  Instead they may want the exposure in the form of a security issued by a repack vehicle.  Or, a security issued by the repack vehicle may provide a specified desired return with credit enhancement and be rated.  There may be any number of rationales for the use of such vehicles—what is certain is that these are now in greater use.
• Deposit products reimagined.  Banks will need to consider and reconsider the types of deposit products they offer and they depend on for funding in light of developments like stablecoins.
• Regulatory reform.  For financial institution issuers, we have yet to see a reproposal of the Basel Endgame, which may come early in the year and change the landscape—or not.

Islamic finance compliant products are an area of growing interest, everywhere.  Whether it is a certificate of deposit, a structured note, commercial paper, a fund, a REIT-dedicated vehicle, there is greater demand for Shari’a compliant financial products.  There also is much more innovation in tokenized products occurring in the Middle East.  We anticipate that this will continue.

Derivatives and indices leading to asset management innovation

• New “wrappers” for derivative (or derivative-like) returns.  Defined outcome ETFs are experiencing rapid growth.  In many respects, these products provide a new package for a tried-and-true combination of derivatives that previously may have been offered in the form of a structured note.  Of course, investors also are looking to separately managed account products as well  in Europe to actively managed certificates for similar types of exposure.
• The melding of derivatives and insurance products and of derivatives and funds products.  Offering an investor a particular return through a fixed index annuity, which is decidedly an insurance product, but bears a resemblance to a structured note has become commonplace.  With recent SEC amendments to the rules relating to RILAs, now offering these has been made easier.  There is a fair bit of innovation related to all of these products, as well as with target date funds and annuities—and this also ties into broader retail access to the private markets, mentioned above.
• Proprietary indices appear to be taking over mutual funds.  Index-based investment products and related product innovations appear to be overtaking mutual funds, at least for now.

Tokenization efforts are likely to continue to flourish and may be most successful with respect to niche areas.  Financial institutions are quite focused on the efficiencies associated with distributed ledger technology—these include, among others, reducing settlement risk, lowering capital requirements, eliminating the need for certain intermediaries in transactions, potentially reducing risk-weighted assets, etc.  For now, the areas that seem most promising are offerings of exempt securities and fund-related products.

Financial institution use of artificial intelligence.  Financial institutions will continue to explore incorporating the use of Artificial Intelligence in aspects of their businesses.  Their use of AI may include more liberal applications for their internal activities, such as compliance, oversight, supervision and surveillance related activities, or facilitating or streamlining workflows in order to achieve greater efficiencies and cost savings.  Over time, we are likely to continue to see more institutions adopt and embrace greater use of AI tools in connection with research, financial tools, and other client-facing activities; however, all of this requires careful implementation in order to ensure compliance with emerging and sometimes overlapping as well as conflicting regulatory regimes.