Jefferies warns of rising US private credit risks and defaults

Jefferies has reported rising risks in the US private credit market, noting that loan defaults at several major funds have reached their highest levels since at least 2021. According to the firm’s GREED & fear report, non-accrual rates saw significant increases in the second quarter of 2026 compared to the first quarter of 2025.

Specific non-accrual rate increases were noted for several major funds: Ares Capital rose to 2.4 per cent, Blue Owl to 2.8 per cent, Golub Capital to 2.9 per cent, and Blackstone Secured Lending Fund to 3.6 per cent.

The report identifies two primary areas of concern: the heavy concentration of lending within private equity and the potential for artificial intelligence to disrupt the software industry. Approximately 70 per cent of private credit lending is extended to private equity. Additionally, an estimated 20-25 per cent of the private credit market is exposed to the software sector, with direct lending to software-as-a-service companies reaching USD 538 billion by the end of 2025.