US private credit market stress intensifies as BDC non-accrual rates hit 9-year highs and defaults reach all-time peaks.
Macro & Markets ·
Non-accrual rates at the 20 largest publicly traded business development companies hit 2.8% in Q2 2026, the highest since 2017, indicating mounting stress among borrowers in the $2 trillion private credit market. Net funding across the 12 largest listed BDCs turned sharply negative at -$2.5 billion in Q2 2025, marking three straight quarters of outflows and the weakest reading in at least 2.5 years. Fitch Ratings reported that defaults in private credit reached record levels in July, underscoring intensifying strain on lenders to small and mid-sized firms.