Deals · Research note · 13 Oct 2026
Private credit defaults: 0.8% of principal or 6.3% of issuers, depending on who counts
On 10 September 2026 Houlihan Lokey put second-quarter defaults at 0.8% of outstanding direct-lending loan principal. On 14 September, press reports of a Fitch Ratings study put the US private credit default rate at 6.3% for the twelve months to August. The two figures are not like-for-like and this note does not present a ratio between them. It sets out what each one counts, where the stress sits, and what the data does not show.
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Every number, and where it comes from
The first five figures in the note.
The full table has 22 rows. Each figure is as published on the date shown, with its denominator.
| Figure | What it measures | Source |
|---|---|---|
| 0.8% | Defaults as a share of outstanding direct-lending loan principal, Q2 2026, full market in Houlihan Lokey's Private Credit DataBank. Size-weighted. The definition captures technical as well as payment defaults. Sample size not disclosed | Houlihan Lokey, Q2 2026 Private Credit DataBank release, 10 Sep 2026 |
| 2.5% | Defaults as a share of borrowers by count, Q2 2026, same DataBank and definition. The closer comparison to an issuer-count rate, though still a single quarter | Houlihan Lokey, Q2 2026 Private Credit DataBank release, 10 Sep 2026 |
| 3.0% / 3.6% | Default rate among borrowers with less than $100M of EBITDA, Q2 2026: size-weighted and by count | Houlihan Lokey, Q2 2026 Private Credit DataBank release, 10 Sep 2026 |
| 12% | Share of loans to borrowers with $10M to $20M of EBITDA valued below 90% of par, up from roughly 1% in 2023. A valuation mark, not a traded price | Houlihan Lokey, Q2 2026 Private Credit DataBank release, 10 Sep 2026 |
| 7% | Share of all loans in the DataBank priced below 90% of par, described as more than double the historical average (period of that average not stated) | Houlihan Lokey, Q2 2026 Private Credit DataBank release, 10 Sep 2026 |
17 more figures in the PDF, each with its source.
Sources
4 primary releases.
- Houlihan Lokey, Houlihan Lokey Finds That Stress Among the Smallest Private Credit Borrowers Has Climbed More Than Tenfold Since 2023 (10 September 2026)"Defaults represented 0.8% of outstanding loan principal, or 2.5% of borrowers by count." "Among borrowers with $10 million to $20 million of EBITDA, that share stands at 12%, up from roughly 1% in 2023." "By contrast, just 3% of loans to borrowers with more than $100 million of EBITDA are priced below that threshold." "At 1.6% of interest dollars, that signal remains contained." Confirmed in paraphrase: 3.0% size-weighted and 3.6% by count for borrowers under $100M of EBITDA; 7% of all loans below 90% of par; 11.8% of loans electing PIK, 6.3% of interest dollars; median EBITDA up 7.4%.hl.com
- Investment Executive (reporting Fitch Ratings), U.S. private credit defaults rise: Fitch (14 September 2026)Excerpts as returned by the fetch tool: "its U.S. private credit default rate for the previous 12 months ticked up to a record high of 6.3% in August"; "up from 6.1% in July." "The health-care sector also has the highest 12-month default rate at 9.9%, up from 9.5% in July, and 6.9% in August 2025" (sentence continues). "It recorded a 0.6% default rate in August, down from 1.2% in July, and 2% in August 2025."investmentexecutive.com
- Benzinga, republished on Webull (reporting Fitch Ratings), Private Credit Defaults Climb To 6.3% In August, Fitch Says (14 September 2026)"Fitch counted 89 distinct issuers that defaulted, generating 109 total default events." Excerpts: "interest deferrals and payment-in-kind substitutions making up 47% of events in the trailing-year period"; "Maturity extensions executed under stress represented 41% over the same window"; "while uncured payment failures were listed at 8%." "The remaining 4% covered bankruptcies, liquidations and restructurings that transferred control from sponsors to lenders." "issuers under $25 million of EBITDA posting a 12.0% trailing-year default rate in August, down from 12.3% in July"; "The $26 million to $50 million EBITDA group rose to 5.2% from 3.9%". Method: "a model-based credit opinion series tracking more than 1,300 credit opinions" and "a privately monitored ratings series covering more than 350 private ratings".webull.com
- Lincoln International, The Lincoln Private Market Index: Earnings Growth Drove a Q2 Rebound While Private Markets Became More Selective (12 August 2026)Excerpts as returned by the fetch tool: "PIK interest was present in 11.1% of loans"; "was present in 55.4% of loans with PIK in Q2"; "or 6.2% of all loans", "which may also be viewed as shadow default rate", "compared to 5.9% in Q1". "The size-weighted covenant default rate declined to 2.7% in Q2 from 3.1% in Q1"; "well below the 3.9% six-year average". "lenders foreclosing on $22.3 billion of pre-takeover principal in the first half of 2026"; "nearly matching the $24.2 billion recorded for all of 2025"; "70.0% of pre-takeover principal involved 2021 and 2022 vintage buyouts". Coverage: "approximately 1,800 private companies".lincolninternational.com