The fact that private credit defaults in the United States hit 9.2% in 2025, sounds a lot like the leadup to money market funds "Breaking the Buck" in 2008.
The default rate among U.S. corporate borrowers of private credit rose to a record 9.2% in 2025, according to a report Friday by credit rating agency Fitch Ratings.
In its monitor of 302 companies with outstanding private credit debt, Fitch recorded 38 defaults among 28 different borrowers. The 9.2% default rate in 2025 follows a previous record 8.1% rate of defaults in 2024.
Smaller issuers with $25 million or less in earnings made up the majority of last year's defaults, which were diversified among sectors, according to the report.
………
Most of the private credit loans were floating rate and tied to the federal funds rate, which has persisted at a high level over the past three years. Fitch pointed to this as a catalyst for last year's defaults.
There are a lot of companies out there who could only service their debts when rates were near 0%.
They are now insolvent, and there is a non-zero chance that this will take down the private credit firms.
This is not good.
0 comments :
Post a Comment