Archive · 28 Aug 2026
US Private Credit Faces Rising Defaults and Software Exposure Risks
Private credit is money lent directly to companies by investment funds instead of traditional banks.
Some large funds are seeing more loans stop making scheduled payments.
Jefferies says these problems are now at their highest levels since at least 2021.
The reported default-related rates are still relatively low compared with some historical periods.
Many private credit loans support private equity-owned companies, which often borrow heavily.
Higher interest rates could make those loans harder to repay.
A large share of lending also goes to software companies.
Artificial intelligence could make it harder for some software businesses to compete.
These combined risks could lead investors to withdraw money from the private credit market.
Non-accrual rates at four major private credit funds rose sharply by the second quarter of 2026.
Jefferies said defaults reached their highest levels at these funds since at least 2021.
About 70% of private credit lending is estimated to support private equity deals.
Software companies account for an estimated 20–25% of private credit exposure, creating additional AI-related risks.
Global private debt assets under management grew from $0.9 trillion in 2020 to $2.1 trillion in 2025.
- Who
- Jefferies and major private credit funds, including Ares Capital, Blue Owl, Golub Capital and Blackstone Secured Lending Fund.
- What
- Private credit funds are experiencing rising loan non-accrual rates and increased concerns about defaults, valuations and investor outflows.
- When
- The cited fund data covers the second quarter of 2026, compared with the first quarter of 2025; broader asset figures run through the end of 2025.
- Where
- The main stress is reported in the US private credit market, within a global private debt market.
- Why
- Risks are linked to higher borrowing costs, heavy private equity exposure, potential investor outflows and artificial-intelligence disruption in software.
- Non-accrual rates
- In the second quarter of 2026, rates were 2.4% at Ares Capital, 2.8% at Blue Owl, 2.9% at Golub Capital and 3.6% at Blackstone Secured Lending Fund.
- Previous comparison
- In the first quarter of 2025, the corresponding rates were 1.5%, 1.4%, 1.2% and 0.3%.
- Private equity exposure
- About 70% of private credit lending is estimated to be extended to private equity.
- Software exposure
- An estimated 20–25% of the private credit market is exposed to software companies.
- SaaS lending
- Direct lending to software-as-a-service companies reached about $538 billion by the end of 2025, or roughly 19% of total direct loans.
- Market growth
- Global private debt assets under management rose from about $0.9 trillion at the end of 2020 to approximately $2.1 trillion at the end of 2025.
- Historical context
- Jefferies said defaults have risen to their highest levels since at least 2021, while remaining relatively low by historical standards.