The $1.2 trillion private credit industry is likely entering the most significant period of credit stress it has experienced since becoming an integral part of the U.S. and European corporate lending landscape. Some of the strategies that helped private credit lenders and their borrowers successfully navigate the COVID-19 pandemic will be important again, but the impact of rising interest rates, the slowing global economy, inflation, and weaker private company valuations, will likely present more sustained challenges as well as higher default rates than experienced during the pandemic. This KBRA report is the first in a series focused on the opaque private credit market, as we seek to leverage our expansive view across the entire landscape of the private credit industry to offer perspectives on the evolving risks and the effectiveness of the industry’s responses.
KBRA’s views are informed by our numerous ratings and credit assessments of the industry’s lenders, sponsors, and borrowers.…