Private Credit: Medallia’s Looming Default Will Be Widely Dispersed

As widely reported and stated by several of the company’s investors, creditors will likely be taking control of Medallia, Inc. following several years of performance headwinds and the sponsor’s decision not to provide additional equity. Although this represents one of the larger term loans in the direct lending market—at nearly $3 billion—we conclude that KBRA-rated vehicles with exposure, as well as the broader direct lending market, are well positioned to absorb any potential losses.

For example, including Medallia in our Q1 2026 KBRA Middle Market Default Monitor (KMDM)—our forward-looking gauge of borrowers actively in payment default, or those that would likely default without significant sponsor or lender intervention—would increase the KMDM modestly on a dollar basis, to 2.5% from 2.2% in Q1 2026 (see Private Credit: Q1…