Private Credit Risk Rising: Borrower Distress Grows in the US

The US private credit market is facing increased borrower distress, with rising non-accrual rates signaling growing risk. Q1 data shows non-accrual debt reached 1.9% of total debt at cost, up 52 bps from the prior quarter. The percentage of borrowers in non-accrual status rose to 4.69%, up from 4.26% in the previous period. Among the top 10 private credit firms, non-accrual debt increased to 3.95% of total debt at cost, while adjusted exposure reached 5.95%. This trend indicates the private credit sector is entering a more challenging phase.

The rising risk in US private credit markets is a concern for investors. The widening non-accrual exposure across major firms suggests potential future challenges for the sector.