The U.S. private credit market is slowing as default rates reach record levels. Fitch Ratings reports that corporate default rates hit 9.2% in 2025. This figure increased from 8.1% in 2024. Smaller companies face the most significant impact from rising borrowing costs.
Blackstone and BlackRock marked down private credit fund values in the first quarter of 2026. Troubled loans in the software sector drove these valuation declines. Artificial intelligence disruption is currently impacting these software company valuations.
The Financial Stability Board issued warnings regarding growing systemic risks. Regulators cited a lack of transparency and deep interconnections with traditional banks. The sector has expanded rapidly since the 2008 financial crisis.