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4 clusters · 12 sources · 31 days · First seen · Last updated

Private credit market instability and rising defaults

Overview

The $1.8 trillion private credit market is experiencing increasing instability as default rates and non-accruing loans reach multi-year highs. While some industry leaders describe the current environment as a normal credit cycle, lenders are reporting an increase in borrowers placed on watchlists due to weakening credit quality.

Recent data from Jefferies indicates that loan defaults at several major funds have reached their highest levels since at least 2021. Non-accrual rates saw significant increases in the second quarter of 2026 compared to the first quarter of 2025. Specific non-accrual rates include Blackstone Secured Lending Fund at 3.6%, Golub Capital at 2.9%, Blue Owl at 2.8%, and Ares Capital at 2.4%.

Stress is increasingly concentrated among smaller borrowers. A Houlihan Lokey report shows that for companies with EBITDA between $10 million and $20 million, 12% of loans are now valued below 90% of par, up from approximately 1% in 2023. In the core middle market ($20 million to $100 million EBITDA), 6% of loans are priced below 90% of par, a three-year high. Default rates for borrowers with less than $100 million in EBITDA reached 3% on a size-weighted basis in Q2 2026, with the healthcare sector recording a 4.2% default rate by borrower count.

Analysts suggest true distress may be understated because many troubled loans are classified as “distressed restructurings” rather than outright defaults, as parties renegotiate terms to avoid formal default status. Sector-specific vulnerabilities remain, particularly in software-as-a-service (SaaS) and private equity, which accounts for approximately 70% of lending.

Entities

Golub Capital · Ares Capital · Bank for International Settlements · Fitch Ratings · Ares Management

Timeline

  1. 2 days ago

    [BUSINESS] 3 sources
    Private credit stress rises among small and middle-market borrowers

    Private credit stress is rising among small and middle-market borrowers, with default rates and loan value degradation increasing significantly for companies with lower EBITDA.

  2. 15 days ago

    [BUSINESS] 3 sources
    Jefferies warns of rising US private credit risks and defaults

    Jefferies warns of rising US private credit risks as loan defaults at major funds hit their highest levels since 2021, driven by exposure to private equity and the software industry.

  3. 25 days ago

    [BUSINESS] 4 sources
    Private credit sector faces rising defaults and significant losses

    The private credit market is seeing a rise in defaults, with the top 20 funds reporting a 2.8% impairment rate. Thoma Bravo faces a nearly $5 billion loss following the Medallia restructuring.

  4. about 1 month ago

    [BUSINESS] 2 sources
    Private credit market faces rising defaults and sector instability

    The private credit market is experiencing rising default rates and a surge in non-accruing loans, driven by AI disruption in the software sector and increased energy costs.

Sources

alternativecreditinvestor.com · cronicaeconomica.com · english.publictv.in · expansion.com · memesita.com · musicman.com.tw · negocios.com · news18.com · newsable.asianetnews.com · origininvestments.com · privateequitywire.co.uk · tradingview.com

This summary has been updated 2 times: see revision history