Private credit has grown into a $1.8 trillion industry

Private credit has grown into a $1.8 trillion industry

But the cracks are starting to show. Key signals worth watching:

• Default rates are climbing as low-rate refinancing meets higher debt costs
• Distressed exchanges are rising — renegotiated terms masking stress that never hits formal default
• Valuation practices built for calm markets are under real pressure
• Investors have limited visibility into how that stress is distributed across funds

The original trade-off — higher yields for illiquidity — made sense near zero rates. It’s harder to defend now.

The deeper issue: the industry scaled faster than its risk frameworks could keep up with.

For allocators, the question isn’t whether private credit belongs in a portfolio. It’s whether your due diligence matches the complexity inside it.

Source: https://www.ft.com/content/58df968f-de4d-4a00-87b6-0b790057f9d3