Private Credit Defaults: What to Watch

• Fitch reports the U.S. private credit default rate reached 9.2% for 2025 in its Privately Monitored Ratings portfolio, up from 8.1% in 2024, with smaller issuers driving the increase.
• Despite record defaults, realized losses for first‑lien lenders have been limited in most resolved cases so far.
• Moody’s highlights rapid expansion across strategies beyond direct lending, while the Federal Reserve outlines structural risk features such as floating‑rate loans, hold‑to‑maturity dynamics, and lower transparency.

How Fitch is characterizing severity

Fitch’s latest commentary indicates the private credit default rate rose to 9.2% in 2025 within its U.S. Privately Monitored Ratings universe, up from 8.1% in 2024, with the highest default incidence among smaller issuers (for example, EBITDA of $25 million or less). Although defaults set a new high, Fitch notes that ultimate outcomes for first‑lien lenders have generally been manageable to date, with several resolved cases paying down at or near par and only modest haircuts in others; Fitch also observes that default rates in its private cohort tend to run above broadly syndicated loan benchmarks for structural reasons. Read More at Fitch.

Bigger picture on growth and risk

Moody’s frames private credit’s growth as extending beyond traditional PE‑backed middle‑market direct lending into areas such as real estate debt, infrastructure debt, and asset‑based finance, with insurers, banks, and retail‑facing vehicles playing increasing roles.
The Federal Reserve’s staff analysis outlines typical characteristics—bilateral documentation, predominantly floating‑rate structures, senior‑secured positioning, limited secondary liquidity, and hold‑to‑maturity behavior—that shape risk transmission and performance under tighter financial conditions. Read More at Moody’s and Federal Reserve.

Disclaimer

This blog post is meant to be informative and provide helpful tips and insights into credit insurance policies.  It is not meant to supersede any policy requirements.  Please consult your credit insurance policy for all requirements including claim filing deadlines and required documentation.

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop trade credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.