U.S. private credit defaults hit new highs

The default rate in Fitch Ratings’ portfolio of U.S. privately monitored ratings (PMR) rose to a new high of 9.2% in 2025, up from 8.1% in 2024.

For the second consecutive year, smaller issuers had a higher default rate than larger issuers.

Issuers with EBITDA of $25 million or less had a default rate of 15.8%, while those with EBITDA above $100 million had a rate of only 4%.

Despite record-high defaults, realised losses for first-lien lenders remained manageable. In 2025, six out of eight cases with ultimate recoveries resulted in full paydowns for lenders.

In the other two cases, lenders likely experienced modest losses, with recoveries still estimated between 70% and 90%.

The 9.2% default rate in Fitch’s PMR portfolio surpassed the 4.5% default rate recorded in Fitch’s broadly syndicated loan (BSL) universe.

Fitch continues to believe that the PMR portfolio’s default rate may be structurally higher than the BSL rate, reflecting a greater likelihood of sponsors and lenders pursuing collaborative defaults and a higher occurrence of repeat defaulters in private credit.