Key Takeaways
- • Default rates in leveraged lending remain under 1%, yet roughly 1 in 9 leveraged loans trades below 90 cents on the dollar, according to the episode's framing of current credit conditions.
- • PitchBook's head of U.S. credit research Kenny Tang, a former bank workout specialist and S&P recovery ratings analyst, explains the disconnect between low reported defaults and elevated loan-price stress.
- • The discussion covers market terminology including BSL, BDC, PIK, cov-lite and LME, and examines what credit LPs should monitor going forward.
- • The episode addresses what cracked in 2026 following the AI software scare and whether today's lenders have the capabilities to run loan workouts.
Summary
A podcast episode featuring Devin and Kenny Tang, head of U.S. credit research at PitchBook, examines an apparent paradox in leveraged credit markets: default rates are under 1%, yet about one in nine leveraged loans trades below 90 cents on the dollar. The episode's premise is that both conditions are simultaneously true, and the conversation is structured to explain why.
Tang, described as a former bank workout and S&P recovery ratings professional who has worked on every side of the lender-borrower table, is positioned to address how defaults can appear low even when underlying stress is high. The discussion also covers what actually deteriorated in 2026 following what the episode describes as the AI software scare.
The episode includes a glossary of terms commonly used in private and syndicated credit, including BSL (broadly syndicated loans), BDC (business development companies), PIK (payment-in-kind), cov-lite (covenant-lite loan structures), and LME (liability management exercises). Credit limited partners are a stated audience, and the conversation addresses which indicators they should monitor.
The episode also raises whether today's lenders have the operational expertise to run workouts, a question of growing relevance as liability management exercises and amend-and-extend activity may defer formal defaults. The source material is a short episode description and does not include specific figures beyond the default rate and loan-price statistics cited.
Tang, described as a former bank workout and S&P recovery ratings professional who has worked on every side of the lender-borrower table, is positioned to address how defaults can appear low even when underlying stress is high. The discussion also covers what actually deteriorated in 2026 following what the episode describes as the AI software scare.
The episode includes a glossary of terms commonly used in private and syndicated credit, including BSL (broadly syndicated loans), BDC (business development companies), PIK (payment-in-kind), cov-lite (covenant-lite loan structures), and LME (liability management exercises). Credit limited partners are a stated audience, and the conversation addresses which indicators they should monitor.
The episode also raises whether today's lenders have the operational expertise to run workouts, a question of growing relevance as liability management exercises and amend-and-extend activity may defer formal defaults. The source material is a short episode description and does not include specific figures beyond the default rate and loan-price statistics cited.
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