Private credit is showing real strain.
Non-accrual loans at the 20 largest BDCs hit 2.8% in Q2—highest since 2017. That means more borrowers have stopped paying or are close to default.
Net funding across the top 12 BDCs dropped to -$2.5B, the worst in over two years. Third straight quarter of net outflows.
Fitch just flagged that private credit defaults hit a record high in July.
This $2 trillion market has been a darling for yield-hungry investors, but cracks are widening. When credit conditions tighten and rates stay elevated, the weakest borrowers get exposed first.
BDCs give retail access to private credit—essentially lending to smaller, riskier companies. When those loans go bad, it's a sign of broader stress in the system.
Watch this space. Private credit has grown fast in a low-rate world. Now it's being tested.
Non-accrual loans at the 20 largest BDCs hit 2.8% in Q2—highest since 2017. That means more borrowers have stopped paying or are close to default.
Net funding across the top 12 BDCs dropped to -$2.5B, the worst in over two years. Third straight quarter of net outflows.
Fitch just flagged that private credit defaults hit a record high in July.
This $2 trillion market has been a darling for yield-hungry investors, but cracks are widening. When credit conditions tighten and rates stay elevated, the weakest borrowers get exposed first.
BDCs give retail access to private credit—essentially lending to smaller, riskier companies. When those loans go bad, it's a sign of broader stress in the system.
Watch this space. Private credit has grown fast in a low-rate world. Now it's being tested.
