US private credit default rate hits a record 6.3%

Fitch's trailing-twelve-month measure reached a high just as European and US supervisors began asking who is holding the risk.

Assembled by Claude from 8 sources at 8 outlets · Wednesday, September 16, 2026, Morning edition, 10:13 AM EDT · no human byline

What happened

The default rate for US private credit over the trailing 12 months rose to 6.3% in August, a historic high, according to a Fitch Ratings report ababnews.com. The same record was reported alongside news that KKR's private high-grade debt deals have surged to $80 billion this year bloomberg.com.

Supervisors are responding. The European Securities and Markets Authority warned that risks in the US private credit market could increasingly affect European investors ipe.com. In the United States, Senator Elizabeth Warren asked the National Association of Insurance Commissioners how it oversees insurers' private assets, saying Congress needs to know how it can mitigate the risks private credit poses to insurance markets and policyholders thinkadvisor.com.

Why it matters to investors

The asset class has grown fastest inside vehicles that are not covered by bank capital rules, and those rules are not relevant to private credit, which sits outside the prudential regulator's perimeter in Australia afr.com. That is the structural point underneath the default number: the losses land with end investors rather than with supervised lenders afr.comthinkadvisor.com.

Managers themselves are flagging complacency. A review by Longwave, which manages approximately $4 billion, found a surprisingly sanguine industry underestimating risks to property developers sharecafe.com.aufinnewsnetwork.com.au. Property development exposure is the specific concern that review raised, and it sits in the same portfolios that have been marketed on steady income finnewsnetwork.com.au.

What to watch

The first thing to track is whether the default rate keeps climbing from its record, because a trailing measure turns slowly and reflects deals struck when financing was cheaper ababnews.com. A commentary described the sector as prone to boom and bust and the current damage as a case of poor risk management, drama waiting for a crisis rather than a crisis yet reuters.com.

Two readings of the same record sit side by side. One is that this is a normal turn in a cycle the asset class has never been through, an industry prone to boom and bust now showing poor risk management reuters.com. The other is that the risk has been distributed to holders who sit outside bank capital rules, which is the concern supervisors have taken up in Europe and in the US insurance system afr.comipe.comthinkadvisor.com.

The second is where the exposure sits. Insurance balance sheets are the specific concern raised with the state regulators' body thinkadvisor.com, while European allocators have been told the American market is the source of the risk ipe.com. Against that, the largest managers report the business is still growing, with high-grade private deals reaching $80 billion this year at one firm alone bloomberg.com.

Sources

1. ababnews.com: U.S. Private Credit Default Rate Hits Historic High of 6.3% - ABAB News (2026-09-16)
2. bloomberg.com: KKR Private High-Grade Debt Deals Surge to $80 Billion This Year - Bloomberg.com (2026-09-16)
3. ipe.com: ESMA flags US private credit risks for European investors | News | IPE (2026-09-16)
4. finnewsnetwork.com.au: Private Credit Risks Underestimated, Longwave Warns | Finance News Network (2026-09-16)
5. sharecafe.com.au: Private Credit Risks Underestimated, Longwave Warns - Sharecafe (2026-09-16)
6. reuters.com: Breakingviews - Private credit hit is drama waiting for crisis | Reuters (2026-09-16)
7. thinkadvisor.com: Sen. Warren Asks NAIC About How It Oversees Insurers' Private Assets - ThinkAdvisor (2026-09-16)
8. afr.com: Nine charts on private credit and whether it will cause the next GFC - AFR (2026-09-16)