Private credit has managed to weather the wave of retail outflows that began in early 2026.
But recent data shows that the industry remains under strain:
Credit metrics are weakening: PIK use, nonaccruals, and default rates are rising
Higher rates are squeezing borrowers: Capital structures are becoming harder to support
Portfolio risk: Weaker borrowers and heavy software exposure have made private credit more vulnerable to a downturn
Read the full breakdown below.
This Week’s Data
BDC Trends, 2Q26 (Raymond James)
Private Credit Default Index (Proskauer)
Weakening Data
Private credit came under heavy scrutiny in early 2026, as concerns over underwriting standards and liquidity drove a wave of redemptions from retail investors.
Since then, the bad press has largely subsided. Direct lending recorded its strongest quarter for institutional fundraising since 2024 in Q2’26.
But data from public BDC filings shows that private credit is not out of the woods.
Both PIK interest and nonaccrual loans have been climbing. According to the Financial Times, the median nonaccrual rate among the 20 largest public BDCs reached its highest level since 2017 in the second quarter.1
The trend extends beyond BDCs. Proskauer’s Private Credit Default Index, which tracks senior secured and unitranche loans across private credit, shows that default rates have gradually risen over the last year.
Higher For Longer
One of the biggest challenges facing borrowers is elevated interest rates.