Six percent. That’s the trailing 12-month default rate across the 1,300 US private debt borrowers Fitch tracks, and it’s a record. Up from 5.7% the quarter before, which was also a record. So we’re setting new highs back to back now. Fitch counted 32 default events in the second quarter, coming from 20 fresh names that hadn’t defaulted before.
That pushes the total pile of defaulters to 84. Private credit spent the last few years wearing the crown as the asset class that never blinks. Steady yields, no messy public-market swings, everybody’s darling. And now the report card shows the same thing every credit cycle eventually shows: borrowers stop paying. The direction only points one way at the moment.
Private credit is where your pension fund, your insurer, and half the “high-yield” products in your brokerage account have been parking money for a decade, chasing the 10%-plus returns banks stopped offering. A 6% default rate is still small, but it’s a record, and it’s climbing every quarter. Watch what the funds holding this stuff mark their loans at, because a default rate that only moves one direction eventually shows up in the returns they promised you.
Private credit was sold as the calm corner. Higher yields, no public-market whiplash, sleep like a baby.
Now 84 of Fitch’s 1,300 borrowers have defaulted and the 12-month rate just hit 6%, a record. The pitch always leaves out that “doesn’t trade daily” and “isn’t losing value” aren’t the same sentence. A default is a default whether or not there’s a ticker to watch it happen in real time.
Sources: feeds.bloomberg.com
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