For most of the past decade, the private-credit story was remarkably straightforward. Banks retreated from parts of leveraged and middle-market lending; institutional investors searched for yield; private-equity (PE) ownership expanded; and alternative asset managers built increasingly sophisticated origination platforms to connect long-duration capital with borrowers that valued speed, certainty and flexibility.
The results were extraordinary. Private credit evolved from a specialist allocation into a major component of corporate finance. The Financial Stability Board (FSB) estimates the market at roughly $1.5 trillion to $2.0 trillion across the jurisdictions in its 2026 assessment. The Federal Reserve (Fed) estimates that private credit represented about 10% of U.S. nonfinancial corporate debt and roughly one-third of below-investment-grade corporate debt excluding bank loans (Financial Stability Board [FSB], 2026; Board of Governors of the Federal Reserve System, 2026).
But the more important development is it has become different.
The market is moving beyond its original model of closed-end institutional funds making relatively small, senior-secured middle-market loans. Private lenders are financing larger companies, competing directly with broadly syndicated loans, creating evergreen and semi-liquid vehicles for wealthy individual investors, using collateralized loan obligations and fund-level financing, partnering with banks and insurers, and extending credit into infrastructure, asset-based finance and other increasingly complex strategies.
At the same time, the economic environment has become less forgiving. Borrowers carrying floating-rate debt have absorbed several years of elevated interest expense. Competition among lenders has compressed spreads and weakened some documentation. Payment-in-kind interest and liability-management exercises have become more important. Redemption requests have tested the liquidity design of some perpetual private-credit vehicles. And, by at least one contemporary measure, U.S. private-credit defaults reached a record level in 2026.
The central question therefore is what exactly investors now own.
Is private credit an enduring source of alpha? Is its apparent stability partly a function of valuation opacity? Or has the migration of credit risk outside traditional banking created a new source of systemic vulnerability?
My view is that all three propositions contain an element of truth—but none is sufficient on its own. The next phase of private credit will be defined by the ability to distinguish spread from alpha, illiquidity from stability, restructuring from credit improvement, and individual-fund resilience from system-wide resilience.
The boom was not simply regulatory arbitrage
The standard explanation for private credit’s rise is that post-global-financial-crisis bank regulation pushed risky lending out of banks and into lightly regulated nonbanks.
That explanation is directionally correct, but incomplete.
Direct lenders have developed economic capabilities that traditional banks and syndicated loan markets do not always replicate efficiently. They can underwrite rapidly, offer certainty of execution, customize amortization and covenant structures, finance acquisitions through delayed-draw facilities, and renegotiate with borrowers without coordinating dozens of creditors.
Recent academic evidence strengthens this argument. Jang, Kim, Sufi, and Chen (2026) find that direct lenders have developed a particular comparative advantage in lending to private-equity-backed businesses in industries rich in intangible capital. Their evidence suggests that direct lenders specialize in lending against enterprise continuation value rather than merely liquidation value. They also find that direct lenders are more specialized by industry than banks. Post-crisis bank regulation contributed to the sector’s expansion, but their analysis indicates that the lending-technology explanation is quantitatively more important than a pure regulatory-arbitrage story (Jang et al., 2026).
This distinction matters because it suggests private credit is not simply bank lending conducted elsewhere. In some segments, private lenders genuinely perform a different intermediation function.
Federal Reserve data reinforce this point. For 2025 originations, private-credit loans in one recent Fed analysis had a median size of approximately $20 million, compared with $275 million in the leveraged-loan market. Private-credit spreads were around 500 basis points over SOFR versus approximately 400 basis points for leveraged loans. But that higher spread accompanied weaker borrower fundamentals: estimated private-credit borrowers had an average interest-coverage ratio of approximately 2.2 times versus 3.7 times for leveraged-loan borrowers, and the private-credit credit-quality distribution was more heavily concentrated in single-B and CCC-or-lower categories (Banegas et al., 2026).
That is the first analytical mistake investors should avoid: higher yield is not synonymous with alpha.
Part of private credit’s excess yield compensates investors for taking more credit risk. Part compensates for illiquidity. Part compensates for complexity, smaller borrower size and limited disclosure. Part pays for capital that can move quickly when public markets are unreliable.
Only what remains after adjusting for those exposures should properly be called alpha.
Where is the alpha?
Private credit has produced compelling historical headline returns. The Cliffwater Direct Lending Index reported a 9.3% return for calendar 2025 and a 20-year annualized return of approximately 9.6%, with only one negative calendar year over that period (Cliffwater, 2026). Those figures help explain why institutional allocations grew so rapidly.
But evaluating private-credit performance requires considerably more care than comparing a private lending index with public bonds.
Private-credit managers mark loans periodically using models, comparable instruments and third-party valuation processes. Consequently, measured volatility tends to be lower than the volatility of economically comparable traded securities. Public leveraged loans can reprice immediately when risk appetite deteriorates; a private loan may move gradually through quarterly marks.
Lower observed volatility is therefore partly structural. It should not automatically be interpreted as lower economic risk.
More importantly, the strongest academic evidence does not support the claim that the average private-debt fund has historically generated substantial risk-adjusted alpha after fees. Erel, Flanagan, and Weisbach (2024) construct replicating portfolios designed to capture the debt and equity risks embedded in private-debt funds. They find positive abnormal performance before fees but statistically insignificant abnormal returns to investors after fees and risk adjustment. Their work also emphasizes that private-debt portfolios contain equity-like risk that simple comparisons against bond benchmarks may fail to capture (Erel et al., 2024).
That is not an argument against private credit. It is an argument for describing the return proposition correctly.
The durable opportunity may be better understood as a combination of illiquidity premium, complexity premium, origination economics and loss-mitigation skill rather than generic “alpha.”
The origination component is particularly important. A private lender able to negotiate bilateral documentation, obtain lender protections, structure equity participation, charge upfront fees and maintain information rights can create economics unavailable in a standardized bond.
The workout component may be even more important. When a stressed syndicated loan has dozens of holders, restructuring incentives can become adversarial. A private-credit borrower may have one lender or a small lending club capable of amending maturities, injecting incremental capital, resetting covenants or exchanging cash interest for PIK interest.
This means that the real test of manager skill is not necessarily whether a portfolio avoids defaults. It is whether the manager priced risk appropriately at origination and maximizes ultimate recovery when underwriting assumptions fail.
That distinction will become increasingly visible as the credit cycle matures.
Competition is also changing the economics of new lending. McKinsey’s 2026 private-markets analysis estimated that U.S. direct-lending volume declined modestly in 2025 even as capital remained abundant. It found that all-in new-issue yields fell to roughly 9.3% from 10.5% in 2024 while leverage remained relatively stable, and that covenant-lite transactions represented approximately 21% of direct-lending deals in 2025 versus 4% in 2023 (McKinsey & Company, 2026).
That is precisely what mature credit markets do: capital flows toward attractive historical returns until competition begins arbitraging away some of the premium.
The next phase will therefore distinguish managers who benefited from the asset class’s beta from managers capable of generating genuine underwriting alpha.
Opacity is both a feature and a bug
Private credit’s second defining characteristic is opacity.
The word is usually used pejoratively, but opacity has two very different economic effects.
On one hand, the absence of daily trading can be stabilizing. Long-term capital does not have to react mechanically to price moves. A lender that believes a company remains viable can restructure a loan rather than sell it into a distressed market. Closed-end private-credit funds typically match long-lived capital against long-lived assets rather than funding multi-year loans with callable deposits.
These characteristics substantially differentiate private credit from banking.
Matvos, Piskorski, and Seru (2026), using fund- and asset-level data covering roughly 1,300 funds and nearly 9,000 loans, find that private-credit funds typically finance 65%–80% of their assets with equity. They also find relatively modest borrowing, little maturity transformation, and fund lives generally of eight to twelve years against underlying loan maturities of roughly two to four years. Their conclusion is important: the balance-sheet structure of traditional private-credit funds does not currently resemble the highly levered, runnable banking structures historically associated with systemic crises (Matvos et al., 2026).
But opacity can also postpone the recognition of deteriorating economics.
A loan marked at 97 cents on the dollar may ultimately be worth 97. Or it may simply not have encountered a price-discovery event yet. Valuation committees, third-party appraisal providers and auditors can improve discipline, but none can create a liquid market where one does not exist.
That issue became more visible during 2026. A Reuters analysis of regulatory filings from 44 publicly reporting U.S. business development companies found that portfolio fair values moved further below reported cost during the first half of the year: aggregate fair value was approximately $92.9 billion at June 30 against cost or amortized cost of approximately $95.2 billion. The aggregate difference was manageable, but the widening gap illustrated that stress was beginning to feed through into marks (Reuters, 2026a).
Opacity also complicates ratings. The IMF has highlighted the growing importance of private ratings in insurance portfolios. Many private-credit instruments owned by insurers are classified as investment grade, which can materially affect regulatory capital treatment. The IMF has warned that growth in structured private-credit exposures, affiliated asset-management relationships and ratings from smaller specialist agencies requires careful supervision because misclassification of underlying risk could produce unexpectedly large losses in stress scenarios (International Monetary Fund [IMF], 2025).
The central issue is therefore whether investors can distinguish economic stability from accounting smoothness.
The default rate is whatever you define it to be
Nowhere is the transparency problem clearer than in default statistics.
Depending on the data provider, borrower universe and definition of a credit event, an investor can currently construct very different descriptions of private-credit health—and each may be technically correct.
Reuters reported in September that Fitch Ratings’ U.S. private-credit default rate reached a record 6.3% for the trailing 12 months through August 2026 (Cherian & Nishant, 2026). That headline is important, but it requires context. Fitch’s published methodology covers approximately 1,300 U.S. and Canadian issuers, combining borrowers tracked through middle-market CLOs and privately monitored ratings. The metric is based on the number of unique defaulters rather than the dollar amount of debt, meaning it should not be interpreted as 6.3% of total private-credit principal being lost (Fitch Ratings, 2026).
Other datasets provide different readings. S&P Global reported that its credit-estimate default rate, including selective defaults, stood at 4.37% at the end of March 2026, compared with 3.9% for the U.S. speculative-grade market. Approximately three-quarters of the borrowers in its credit-estimate universe were rated around the B- category, emphasizing the inherently speculative-grade nature of much of the market (S&P Global Ratings, 2026).
KBRA’s Q2 2026 surveillance universe, meanwhile, covered 2,785 middle-market borrowers representing more than $1.2 trillion of direct-lending debt. Its Middle Market Default Monitor reached 3.3% by borrower count and 2.4% by debt during the trailing 12 months through June. Median interest coverage was only approximately 1.6 times, while the number of borrowers experiencing or approaching distress reached a record in KBRA’s dataset (KBRA, 2026a).
Private-credit stress often appears first as amendments, maturity extensions, sponsor equity injections, distressed exchanges, interest deferrals or switches from cash interest to PIK. A narrow payment-default measure can therefore underestimate credit deterioration, while a broad measure that treats restructurings as defaults may exaggerate immediate realized losses.
Moody’s Analytics estimated that the 2025 private-credit default rate could plausibly be described as somewhere between roughly 1.6% and 4.7% depending on whether distressed exchanges were included. Moody’s also observed that distressed restructurings represented roughly 65% of corporate defaults in 2025, highlighting how much of the modern credit cycle is occurring through negotiated transactions rather than conventional missed-payment bankruptcies (Moody’s Analytics, 2026).
PIK deserves particular attention in this context. PIK can provide rational temporary liquidity relief. But recurring PIK effectively transforms today’s unpaid interest into tomorrow’s additional principal. It therefore raises leverage precisely when a borrower’s ability to service cash interest may already be under pressure.
KBRA’s direct-lending data illustrate the point. For 2025, loans using PIK showed an average implied recovery of approximately 41.6 cents on the dollar versus 52.6 cents for non-PIK loans. KBRA appropriately cautions that this does not prove PIK causes lower recoveries—stressed borrowers are more likely to require PIK in the first place—but the relationship is a useful warning indicator (KBRA, 2026b).
For sophisticated investors, therefore, headline default rates are increasingly insufficient. The relevant credit dashboard includes non-accruals, PIK income, amendments, maturity extensions, sponsor equity cures, changes in fair value, recurring EBITDA add-backs and ultimate recoveries.
The question is, “How much economic value has already migrated from the lender to the borrower without being labeled a default?”
The liquidity transformation problem
Traditional private-credit funds were designed around a simple bargain: investors gave up liquidity and, in exchange, managers could own illiquid loans without worrying about redemptions.
That bargain is changing.
The expansion of evergreen BDCs and interval funds has brought private credit to a substantially broader investor base. According to the Federal Reserve, perpetual-life BDCs represented approximately $306 billion of gross assets and $161 billion of net assets in early 2026, while credit-focused interval funds represented another $119 billion of gross assets and $80 billion of net assets. Together, these semi-liquid structures represented around $241 billion of net assets, roughly 20% of net private-credit vehicle assets in the Fed’s estimate (Board of Governors of the Federal Reserve System, 2026).
The innovation is economically significant. It allows investors to access an asset class previously dominated by pensions, insurers, endowments and sovereign wealth funds.
But it changes the liability side of the private-credit model.
An eight-year closed-end fund does not have to satisfy quarterly redemption requests. A perpetual vehicle that promises periodic repurchases does—even if those repurchases are capped.
The distinction became tangible in 2026. The Federal Reserve reported that redemption requests at a number of semi-liquid private-credit vehicles increased sharply and frequently exceeded stated quarterly limits. Most managers responded exactly as their fund documents permitted: they capped repurchases rather than liquidating loans aggressively (Board of Governors of the Federal Reserve System, 2026).
The pressure persisted later in the year. Investors in Morgan Stanley’s North Haven Private Income Fund requested redemptions equivalent to 11.4% of shares in its third-quarter tender, while the fund repurchased 5%. Blackstone’s flagship private-credit fund similarly received requests equivalent to approximately 10% of shares while maintaining a 5% limit. Ares’ flagship semi-liquid credit vehicle saw requests of 13.1% in the third quarter, also above its 5% repurchase level (Reuters, 2026b, 2026c, 2026d).
Importantly, gates functioning according to their contractual design are not equivalent to insolvency.
Indeed, gates may protect remaining investors from fire-sale losses.
But the episode highlights a conceptual contradiction worth monitoring: the underlying asset has not become more liquid merely because the wrapper offers more frequent opportunities to request cash.
If semi-liquid vehicles become a significantly larger proportion of private-credit capital, investor behavior rather than borrower fundamentals could become an increasingly important source of procyclicality.
That would represent a fundamental change in the asset class.
Is private credit systemically risky?
This is where the debate often becomes least precise.
Calling private credit “the next banking crisis” ignores several powerful stabilizers. Saying private credit “cannot be systemic because funds do not take deposits” ignores the increasingly dense network connecting private-credit managers with banks, insurers, private-equity sponsors and retail wealth channels.
The correct unit of analysis is not the private-credit fund in isolation.
It is the financial network surrounding it.
Bank exposure is an obvious example. Federal Reserve researchers found that credit commitments from the largest U.S. banks to private-credit funds and BDCs rose by approximately 145% over five years to about $95 billion at the end of 2024, with roughly $56 billion utilized. The researchers concluded that these exposures appeared manageable and generally high quality, but emphasized their rapid growth and the importance of continued monitoring (Berrospide et al., 2025).
The FSB’s broader international assessment captures approximately $220 billion of drawn and undrawn bank credit lines to private-credit funds across reporting jurisdictions, while noting commercial estimates of approximately $270 billion to $500 billion. The unusually wide range is itself revealing: supervisors are trying to assess a rapidly growing network for which definitions and data remain inconsistent (FSB, 2026).
And direct credit lines are only one connection.
Banks provide revolving facilities to portfolio companies financed by private-credit lenders. They provide subscription lines and NAV facilities to funds. They arrange securitizations. They participate in synthetic risk transfers. They finance private-equity sponsors and sometimes enter strategic partnerships with alternative asset managers.
Insurers add another layer. Private credit offers life insurers an attractive match between long-dated liabilities and higher-spread assets, but structured exposures, affiliated asset managers and rating-dependent capital treatment create additional transmission channels (IMF, 2025).
This does not mean those connections are inherently dangerous. In fact, they may reflect efficient specialization: banks provide short-term liquidity and balance-sheet services, while private funds supply patient risk capital.
The systemic question arises when multiple relationships become correlated under stress.
Suppose borrower defaults rise. Fund marks decline. Investors in semi-liquid structures request redemptions. Managers preserve liquidity by reducing new originations and calling less capital for follow-on lending. Portfolio companies simultaneously draw bank revolvers. Funds draw portions of their own bank facilities. Insurers experience mark or rating pressure. Private-equity sponsors become less willing to inject incremental equity.
No single step necessarily produces a crisis. The problem is the sequence.
The most plausible systemic transmission mechanism may therefore not be a Lehman-style failure of a highly levered private-credit institution. It may be a credit-supply shock transmitted through overlapping balance sheets.
Federal Reserve research published in August 2026 finds that larger middle-market borrowers can often substitute between private credit and the leveraged-loan market when relative financing conditions change. Smaller firms have much less ability to do so. Because larger and smaller borrowers each account for a meaningful share of private-credit loan volumes, a sustained contraction in private-credit availability could disproportionately affect smaller middle-market companies even if larger firms successfully refinance elsewhere (Banegas et al., 2026).
That is how private credit could become macroeconomically important without replicating a bank run.
The transmission would occur through reduced lending, weaker investment, restructuring pressure and potentially employment—not necessarily through the failure of the funds themselves.
Why this is not 2008—and why that should not end the discussion
The temptation to compare every rapidly growing credit market with U.S. subprime mortgages before 2008 should be resisted.
The structural differences are substantial.
Traditional private-credit funds generally have considerably more equity capital than banks. They do not depend on runnable deposits. Their liabilities are often longer-dated than their assets. Many loans are senior secured. Managers typically have direct information access and meaningful restructuring rights.
Recent research supports the proposition that private-credit funds, considered narrowly as balance sheets, are substantially less fragile than banks (Matvos et al., 2026). Separate stress-testing work by Chernenko and Scharfstein (2026) similarly concludes that private-credit funds appear capable of absorbing severe stresses under a range of assumptions, although deleveraging could involve asset sales, use of cash buffers and reduced lending to portfolio companies.
That last point deserves emphasis.
A financial intermediary does not need to default to amplify a downturn.
If it responds to deteriorating conditions by shrinking its balance sheet, refusing refinancings or prioritizing debt repayment over new lending, the real economy experiences tighter financial conditions anyway.
Systemic risk is therefore not binary.
The relevant question is, “How does a much larger private-credit ecosystem behave when credit losses, valuation pressure and liquidity demands occur simultaneously?”
We do not yet have a complete empirical answer because today’s private-credit market has never experienced a prolonged recession at its current scale and structure. That is precisely the concern emphasized by the FSB (2026).
The real risk is the interaction of four transformations
For me, the private-credit debate can be reduced to four structural transformations occurring simultaneously.
- The first is scale. Private credit is no longer marginal. At approximately $1.4 trillion of U.S. private-credit loans by late 2025, the market is large enough that changes in lending standards can affect the financing conditions of a meaningful segment of corporate America.
- The second is borrower migration. Private credit is moving beyond the smallest middle-market borrowers and increasingly overlapping with syndicated lending. This expands the opportunity set but also increases competition and can reduce the pricing premium historically available to private lenders.
- The third is liability transformation. Closed-end institutional capital is increasingly being supplemented by perpetual and semi-liquid wealth vehicles. The more frequently investors expect access to cash, the more consequential asset-liability management becomes.
- The fourth is interconnection. Banks, insurers, private-equity sponsors and private-credit managers increasingly occupy different layers of the same financing chain.
The interaction of these developments is what matters.
An opaque asset funded almost entirely by long-duration equity capital is one thing. An opaque asset funded through a vehicle experiencing recurring redemption requests, connected to bank facilities, held indirectly by insurers and concentrated in borrowers exposed to the same macroeconomic shock is something else.
That is why the most important evolution in private credit is the changing architecture surrounding those assets.
What sophisticated investors should measure now
The post-boom private-credit market demands a different analytical toolkit.
Portfolio yield remains important, but the composition of that yield matters more. Investors should distinguish cash interest from PIK, recurring spread income from one-off fees, and contractual yield from ultimately realized return.
Default rates remain useful, but restructuring activity deserves equal weight. A portfolio can report relatively few payment defaults while accumulating maturity extensions, covenant resets and PIK balances that reveal deteriorating borrower economics.
NAV volatility should be interpreted alongside changes in valuation-to-cost, non-accruals and realized recovery experience. The absence of daily volatility should never be confused with the absence of economic volatility.
At the fund level, liquidity analysis should extend beyond the nominal redemption terms. What proportion of assets could realistically be sold without material discounts? How large are unfunded commitments? What bank facilities exist? What happens if investors request the maximum redemption while borrowers simultaneously draw commitments?
At the system level, regulators should focus less on forcing private credit into a bank-regulatory template and more on improving visibility across institutions. The FSB’s emphasis on harmonized definitions, granular fund- and loan-level data, leverage, liquidity terms and cross-sector interconnections is therefore directionally appropriate (FSB, 2026).
The objective should be to ensure that private information at the loan level does not become blindness at the system level.
After the boom comes differentiation
Private credit’s first great era was defined by asset gathering. Its next era will be defined by differentiation.
The strongest managers will not necessarily be those reporting the highest gross yields. They will be those demonstrating repeatable sourcing advantages, disciplined documentation, realistic marks, conservative leverage, robust liability management and superior recoveries.
Likewise, the strongest investors will increasingly distinguish between three very different sources of return.
There is beta: compensation for taking leveraged corporate credit risk.
There is structural premium: compensation for illiquidity, complexity and giving borrowers certainty of execution.
And there is genuine alpha: superior security selection, structuring and workout capability after properly accounting for fees and risk.
Those distinctions were less visible when rates were low, defaults were subdued, capital was locked up and allocations were expanding almost continuously.
They are becoming much more visible now.
The current evidence does not support the claim that private credit, by itself, has already become a systemic threat. Federal Reserve, ECB and academic work all identify structural characteristics that make traditional private-credit funds substantially more resilient than banks, while the ECB’s 2026 work concludes that direct euro-area exposures remain limited enough that private credit alone is unlikely currently to generate systemic instability there (Cera et al., 2026). But neither does the evidence justify complacency.
Defaults are rising in several contemporary datasets. PIK and restructuring activity deserve scrutiny. Semi-liquid vehicles have experienced repeated redemption pressure. Bank and insurer links are expanding. And supervisors themselves acknowledge that they lack complete visibility into the system.
The intellectual mistake would be to insist on choosing between “alpha,” “opacity,” and “systemic risk.”
Private credit contains all three.
The investable question is whether the return premium remains sufficient compensation for the credit, liquidity and complexity risks being assumed.
The regulatory question is whether the system can observe those risks before they become correlated.
And the strategic question for the industry is whether a structure built to intermediate illiquid credit can preserve its advantages while accommodating an increasingly liquid investor base.
Private credit has successfully passed its adoption test. It is now beginning its much more consequential credit-cycle test.
The answer will determine what kind of asset class it becomes.
References
Banegas, A., Castelo, S., Degerli, A., Dobridge, C., & Kennedy, W. (2026, August 11). Private credit and leveraged loan markets: Similarities, differences, and substitution. FEDS Notes, Board of Governors of the Federal Reserve System. https://doi.org/10.17016/2380-7172.4133
Berrospide, J., Cai, F., Lewis-Hayre, S., & Zikes, F. (2025, May 23). Bank lending to private credit: Size, characteristics, and financial stability implications. FEDS Notes, Board of Governors of the Federal Reserve System.
Board of Governors of the Federal Reserve System. (2026). Financial stability report: May 2026. Washington, DC: Author.
Cera, K., Dieckelmann, D., Nikolov, K., Schepens, G., & Schwartz Blicke, O. (2026). Stress in global private credit markets and its implications for euro area financial stability. Financial Stability Review, 2026(1). European Central Bank.
Cherian, J. M., & Nishant, N. (2026, September 28). With Burry as adviser, a new short-focused fund takes aim at private credit risks. Reuters.
Chernenko, S., Ialenti, R., & Scharfstein, D. S. (2026). Bank capital and the growth of private credit [Working paper, revised March 2026]. SSRN. https://doi.org/10.2139/ssrn.5097437
Chernenko, S., & Scharfstein, D. S. (2026). Private credit and financial stability [Working paper]. SSRN.
Cliffwater. (2026, March 31). Cliffwater Direct Lending Index data supports strength of private credit.
Erel, I., Flanagan, T., & Weisbach, M. S. (2024). Risk-adjusting the returns to private debt funds (NBER Working Paper No. 32278). National Bureau of Economic Research. https://doi.org/10.3386/w32278
Financial Stability Board. (2026, May 6). Report on vulnerabilities in private credit. Basel, Switzerland: Author.
Fitch Ratings. (2026, January 30). U.S. private credit: Default rate methodology—PCDR universe, calculations and definitions.
International Monetary Fund. (2025). Global financial stability report: Shifting ground beneath the calm—Stability challenges amid changes in financial markets. Washington, DC: Author.
Jang, Y. S., Kim, D., Sufi, A., & Chen, X. (2026). The lending technology of direct lenders in private credit (NBER Working Paper No. 34500, revised May 2026). National Bureau of Economic Research. https://doi.org/10.3386/w34500
KBRA. (2026a). Private credit: Q2 2026 middle market compendium—EBITDA’s fading tailwinds.
KBRA. (2026b, April 2). PIK loans drag implied recoveries for KBRA DLD Direct Lending Index.
Matvos, G., Piskorski, T., & Seru, A. (2026). Private credit, balance sheets and financial stability (NBER Working Paper No. 34991, revised August 2026). National Bureau of Economic Research. https://doi.org/10.3386/w34991
McKinsey & Company. (2026). Private credit market enters a new phase. In Global private markets report.
Moody’s Analytics. (2026, April 28). America’s corporate credit is at a tipping point: Default rates are easing, credit risk is fragmented and fragile across markets.
Reuters. (2026a, September 4). Private credit roundup: Software marks and Blackstone’s backlog of redemptions.
Reuters. (2026b, September 18). Morgan Stanley private credit fund redemption requests remain elevated in third quarter.
Reuters. (2026c, September 3). Blackstone private credit fund maintains 5% cap as redemption requests remain elevated.
Reuters. (2026d, September 24). Ares fund withdrawal requests decline as private credit redemptions ease.
S&P Global Ratings. (2026). CreditWeek: Has the private credit test just started?