Nobody agrees what the private credit default rate is
Estimates for the same asset class range from about 1% to 19%, depending entirely on who is doing the counting.
Assembled by Claude from 10 sources at 9 outlets · Thursday, September 17, 2026, Evening edition, 5:13 PM EDT · no human byline
What happened
Bloomberg put the problem plainly: private credit defaults are 1%, 6% or 19%, depending who you ask bloomberg.com. Either the asset class has a serious default problem or barely one at all, and it all depends on who is counting bloomberg.com. Fitch Ratings sits inside that range, and separately has the US private credit default rate hitting a record of 6.3% bloomberg.com.
The disagreement is not academic. Private debt has gone from niche to a $2 trillion industry library.hbs.edu, and the Federal Reserve has cited increased pressure on the private credit segment as a risk library.hbs.edu. The Wall Street Journal's framing is that opaque private-credit leverage raises risks for investors wsj.com, and CreditSights is publishing on what operational and financial pressures are driving elevated default risk know.creditsights.com.
Why it matters to investors
Retail and retirement money is being routed into the asset class while the measurement question is open. Private market allocations in UK defined contribution default funds could rise to as much as 30 per cent by 2035, with private credit set to take a share of that alternativecreditinvestor.com. A default fund is where savers end up when they make no choice at all, which makes the reliability of the default rate a consumer-protection question as well as a credit one.
Regulators are circling from several directions. ESMA has flagged US private credit risks for European investors ipe.com, AM Best is presenting on private credit risks at an insurance summit in 2026 finance.yahoo.com, and American Banker has warned that banks financing the AI build-out are lending with less visibility into credit risk than they would otherwise have americanbanker.com. That last point matters because private credit lending to AI is one of the fastest-growing exposures in the book americanbanker.com.
What to watch
The insurance channel is where the stress is already visible. A-Cap insurers face a new takeover push in South Carolina over exposure to high-risk private credit, after the department issued a cease-and-desist order on Dec. 11, 2024 as financial concerns escalated insurancenewsnet.com. The same case is being tracked as a bankruptcy story wsj.com.
Watch, too, for borrowers refinancing out. Wealth manager Mercer is taking out private credit loans with a new loan, swapping into cheaper capital in the bank loan market bloomberg.com. When the best credits leave for bank financing, the remaining pool gets worse, and the definition question becomes the only thing standing between an investor and knowing what they own bloomberg.comlibrary.hbs.edu.
Sources
- bloomberg.com: Wealth Manager Mercer Is Taking Out Private Credit With New Loan - Bloomberg News (2026-09-17)
- bloomberg.com: Private Credit Defaults Are 1%, 6% or 19%, Depending Who You Ask - Bloomberg (2026-09-17)
- wsj.com: Daily Briefing: A-CAP Insurers Face Takeover Bid Over Risky Private Credit - WSJ (2026-09-17)
- insurancenewsnet.com: A-Cap insurers face new takeover push in South Carolina - InsuranceNewsNet (2026-09-17)
- library.hbs.edu: How Private Debt Went from Niche to a $2 Trillion Industry | Working Knowledge (2026-09-17)
- ipe.com: Asset owner body calls on private market managers to adopt net zero strategies | News | IPE (2026-09-17)
- alternativecreditinvestor.com: Private credit exposure set to rise in DC pensions - Alternative Credit Investor (2026-09-17)
- finance.yahoo.com: AM Best to Discuss Its Views on Private Credit Surge and Risks at 2026 NAIC/NIPR ... (2026-09-17)
- know.creditsights.com: US LFI Restructuring Runway Report – September 2026 - CreditSights (2026-09-17)
- americanbanker.com: Banks financing the AI build-out should learn from power markets | American Banker (2026-09-17)