Private Credit: Lessons From 2025's At-Risk Cohort

At year-end 2024, KBRA identified 5% of the 1,903 levered middle market (MM) borrowers assessed during the year at an elevated risk of future payment default.

While these borrowers were current at the time of assessment, KBRA continued to monitor them throughout 2025. Of the 79 subsequently reviewed, 56 (71%) exhibited further credit deterioration. Among those, 51 experienced liquidity strain significant enough to require lender or sponsor support to avoid a likely payment default. Ultimately, 25 of the 79 borrowers either restructured their capital structures or missed a scheduled debt service payment.

This KBRA report details the key characteristics used to identify companies at risk of default, highlights sector-specific trends associated with subsequent credit quality deterioration or improvement, and discusses what these themes…