The default rate for U.S. private credit issuers rose in the second quarter, according to new data from Fitch Ratings.
The rating agency reported that the trailing 12-month default rate for private issuers — across a portfolio comprised of both 300 privately-rated issuers and 900 rated middle-market issuers — rose to 5.5% in the second quarter, up from 4.5% in the first quarter.
For the 300 privately-monitored issuers alone, the annual default rate came in at 9.5% in the second quarter, up from 7.8% at the start of the year — marking a record high since it began tracking these credits in 2019, Fitch said.
There were eight new defaulters in the quarter, pushing the 12-month total to 28 defaults, it noted.
“Smaller, private issuers remain particularly vulnerable to economic swings, GDP slowdowns and persistent elevated interest rates, especially given their floating-rate structures,” said Lyle Margolis, head of private credit, corporates at Fitch in a release.
Alongside the rise in defaults, new issuance of middle-market credits also declined by 16% in the second quarter to US$11.6 billion, the report said.
“Macroeconomic factors such as U.S. tariff volatility, a deteriorating economic outlook and high interest rates dampened issuance in [the second quarter],” Fitch said.