Defaults across U.S. private credit deals are coming off the heels of record levels, underscoring growing strains in a market already under increased scrutiny from Wall Street leaders. According to a new report from Fitch Ratings, the default rate in its portfolio of U.S. privately monitored ratings (PMR) climbed to 9.2% in 2025—surpassing the previous record of 8.1% in 2024 and more than doubling the 3.6% rate recorded in 2023.
The report found that smaller issuers were hit disproportionately hard. Companies with an EBITDA of no more than $25 million saw defaults soar to 15.8%, while those generating more than $100 million in EBITDA experienced rates of less than 4%. Fitch classified companies that filed for bankruptcy or restructured debt with lenders as defaults.
Even as defaults rose, Fitch noted that realized losses for first-lien lenders were limited. Six of eight resolved cases resulted in full par paydowns, while recoveries in the other two were estimated at between 70% and 90%.
Fitch's PMR default rate also sharply exceeded the 4.5% rate for the firm's broadly syndicated loan (BSL) universe. The firm said it believes the PMR portfolio default rate "may be structurally higher" than the BSL rate, "reflecting a greater tendency for sponsors and lenders to pursue collaborative defaults and a higher incidence of repeat defaulters in private credit."
According to Reuters, Fitch's analysis primarily covered middle-market companies with earnings of no more than $100 million and outstanding debt of $500 million or less.
Private credit's rapid expansion has drawn warnings from prominent financiers, including former Goldman Sachs CEO Lloyd Blankfein, JPMorgan Chase Chief Jamie Dimon and Marathon Asset Management Founder Bruce Richards, who argue that the sector's growth may introduce new risks as investors extend further into the credit cycle.
Blankfein, in an interview with Bloomberg's David Gura, said his main concern lies in the market's lack of transparency.
"One has to worry about opaque assets where there's illiquidity," he said, explaining that such holdings are hard to "mark to market" because comparable data points are scarce—or, as he put it, there is no "precision."
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