Key Takeaways
- • PitchBook data cited by The Wall Street Journal show private equity fund returns have fallen below 10 percent, down from around 15 percent in the near-zero interest rate era.
- • About US$140bn of risky corporate loans mature in 2028 and another US$160bn in 2029, roughly triple the average of about US$60bn due in any two-year window from 2023 to 2025.
- • Software companies make up about one-third of the loans coming due across 2028-2029, and about one quarter carry CCC-plus or below junk ratings.
- • Bank of America forecasts the default rate for below-investment-grade corporate loans will double next year to 4 percent, with lower recoveries for creditors.
- • Private equity growth investments in defence reached US$4bn in the first nine months of 2026, up from US$500m in 2024, accounting for 41 percent of defence PE deal value in 2026 versus 3 percent in 2024.
Summary
Private equity returns have dropped below 10 percent in recent years, from around 15 percent during the period when interest rates were nearly zero, according to PitchBook data cited by The Wall Street Journal. Those returns flow to investors including pensions, insurers and wealthy individuals, placing pension funds and insurers directly exposed to the sector's refinancing pressures.
The Journal's analysis, drawing on the same PitchBook data, indicates that about US$140bn in risky corporate loans is scheduled to mature in 2028 and another US$160bn in 2029. That compares with an average of about US$60bn due in any two-year window between 2023 and 2025. Software companies account for about one-third of the loans coming due over the two years, and about one quarter carry junk ratings of CCC-plus or below.
Industry figures expressed concern about the refinancing environment. Hugh MacArthur, chairman of Bain & Co.'s global private-equity practice, said there would be businesses that get the keys handed back to the bank and do not survive. Mark Jenkins, head of global credit at Carlyle Group, said the market was previously an incredible place to refinance but no longer is, and that he sees no expectation of rate cuts in the foreseeable future. Bank of America forecasts that the default rate for below-investment-grade corporate loans will double next year to 4 percent and that creditors will recover less on defaulted loans.
In defence, CNBC reported, citing PitchBook data, that private equity growth investments reached US$4bn in the first nine months of 2026, up from US$500m in 2024. These deals made up 41 percent of defence PE deal value in 2026, against 3 percent in 2024. Jim Corridore, lead industrials analyst at PitchBook, said PE is moving into territory venture capital used to own. Shonnel Malani, managing partner and global head of aerospace and defence at Advent International, said defence technology companies are increasingly valued on technological promise rather than revenue, profit or order books, and warned of "a very big risk" of an investment bubble, citing "a lot of froth in the system." PitchBook recorded 504 defence PE deals and 101 exits since 2021, with the comparison including add-on acquisitions.
Separately, Canadian pension funds, insurers and institutional investors committed nearly C$100bn in new capital to Canadian assets, according to the report, with CIBC providing $2bn in financing to small and medium-sized defence-related and dual-use businesses and Ottawa deploying $700m through the Business Development Bank of Canada for defence and dual-use technologies.
The Journal's analysis, drawing on the same PitchBook data, indicates that about US$140bn in risky corporate loans is scheduled to mature in 2028 and another US$160bn in 2029. That compares with an average of about US$60bn due in any two-year window between 2023 and 2025. Software companies account for about one-third of the loans coming due over the two years, and about one quarter carry junk ratings of CCC-plus or below.
Industry figures expressed concern about the refinancing environment. Hugh MacArthur, chairman of Bain & Co.'s global private-equity practice, said there would be businesses that get the keys handed back to the bank and do not survive. Mark Jenkins, head of global credit at Carlyle Group, said the market was previously an incredible place to refinance but no longer is, and that he sees no expectation of rate cuts in the foreseeable future. Bank of America forecasts that the default rate for below-investment-grade corporate loans will double next year to 4 percent and that creditors will recover less on defaulted loans.
In defence, CNBC reported, citing PitchBook data, that private equity growth investments reached US$4bn in the first nine months of 2026, up from US$500m in 2024. These deals made up 41 percent of defence PE deal value in 2026, against 3 percent in 2024. Jim Corridore, lead industrials analyst at PitchBook, said PE is moving into territory venture capital used to own. Shonnel Malani, managing partner and global head of aerospace and defence at Advent International, said defence technology companies are increasingly valued on technological promise rather than revenue, profit or order books, and warned of "a very big risk" of an investment bubble, citing "a lot of froth in the system." PitchBook recorded 504 defence PE deals and 101 exits since 2021, with the comparison including add-on acquisitions.
Separately, Canadian pension funds, insurers and institutional investors committed nearly C$100bn in new capital to Canadian assets, according to the report, with CIBC providing $2bn in financing to small and medium-sized defence-related and dual-use businesses and Ottawa deploying $700m through the Business Development Bank of Canada for defence and dual-use technologies.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.