Key Takeaways
- • Fitch Ratings reported that the trailing 12-month default rate for U.S. private credit reached a record 6.3% in the third quarter of 2026, up from 6.0% in the prior quarter and marking the fourth straight quarterly increase.
- • Fitch recorded 27 private credit default events in Q3 from 20 new unique defaulters, lifting the trailing 12-month defaulter count to 91.
- • Industrials and manufacturing and consumer products and services posted the highest sector default rates at 9.7% each, while health care had the highest default count.
- • Software had the lowest sector default rate at 0.6% for the quarter.
- • Fitch attributes the pressure to persistently high real interest rates, which are straining highly leveraged borrowers' debt-service capacity and refinancing options.
Summary
The default rate for U.S. private credit hit a record high in the third quarter of 2026, according to a new report from Fitch Ratings. The trailing 12-month default rate came in at 6.3% for Q3, up from 6.0% in the second quarter, extending a fourth consecutive quarterly increase.
Fitch recorded 27 private credit default events during the quarter, involving 20 new unique defaulters. The trailing 12-month total stands at 91 defaulters. Lyle Margolis, head of private credit for U.S. corporates at Fitch, said default rates remained elevated, with stressed maturity extensions, interest deferrals and payment-in-kind (PIK) introductions accounting for most default events.
Margolis said persistently high real interest rates continue to pressure highly leveraged borrowers' debt-service capacity and refinancing options. This dynamic is central to Fitch's assessment that stress in the asset class remains concentrated among leveraged borrowers rather than broadly distributed.
By sector, industrials and manufacturing and consumer products and services recorded the highest quarterly default rates at 9.7% each. Health care had the highest default count in the quarter. Software was the strongest performer, with the lowest quarterly default rate at 0.6%.
Forbes, in a parallel report, characterized the figures as a record 6.3% default rate and described the trend as "quiet distress" building beneath the surface of the asset class. The Forbes coverage is consistent with Fitch's findings.
Fitch recorded 27 private credit default events during the quarter, involving 20 new unique defaulters. The trailing 12-month total stands at 91 defaulters. Lyle Margolis, head of private credit for U.S. corporates at Fitch, said default rates remained elevated, with stressed maturity extensions, interest deferrals and payment-in-kind (PIK) introductions accounting for most default events.
Margolis said persistently high real interest rates continue to pressure highly leveraged borrowers' debt-service capacity and refinancing options. This dynamic is central to Fitch's assessment that stress in the asset class remains concentrated among leveraged borrowers rather than broadly distributed.
By sector, industrials and manufacturing and consumer products and services recorded the highest quarterly default rates at 9.7% each. Health care had the highest default count in the quarter. Software was the strongest performer, with the lowest quarterly default rate at 0.6%.
Forbes, in a parallel report, characterized the figures as a record 6.3% default rate and described the trend as "quiet distress" building beneath the surface of the asset class. The Forbes coverage is consistent with Fitch's findings.
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