Aggregator

US Private Credit Default Rate Remains At Record High: Fitch

As we have detailed extensively, most recently here: "Blackrock's Private Credit Fund Gates Investors Again After Redemption Requests Surge ", private credit firms continue to face a flood of redemption requests...

And after this week's report from Fitch Ratings, it appears any light at the end of the tunnel is an oncoming train.

As Andrew Moran reports for The Epoch Times, the U.S. private credit default rate remained at a record high in May, according to the latest update from Fitch Ratings.

Private credit woes this year have taken a backseat to various headwinds and tailwinds, whether the war in Iran or SpaceX’s blockbuster debut on Wall Street.

But data suggest that pressures are still mounting for the industry.

Fitch Ratings said its Private Credit Default Rate remained at a record 6 percent in May, unchanged from the previous month.

Monitoring approximately 1,500 private credit issuers, Fitch logged 14 default events last month. Healthcare providers, business services, and industrial manufacturing each registered three events.

Six serial defaulters—issuers that have defaulted multiple times—were discovered by Fitch. Additionally, half of the default events consisted of maturity extensions under stress.

“This continued the prior month trend of maturity extensions under stress outpacing all other default scenarios,” Fitch reported.

“Five of the seven maturity extensions pushed loan maturities out by one to two years from their original maturity dates, while one extended the maturity by seven months and another extended it by one month.”

It is unclear whether the worst is over for the $2 trillion private credit sector, as more investment firms continue to see client exodus or impose capital redemption limits.

Turmoil Persists

In a recent letter to shareholders, BlackRock Private Credit Fund stated that shareholder repurchase requests reached more than 13 percent of outstanding shares in the second quarter, pushing past the investment vehicle’s 5 percent quarterly limit for the first time since it launched in June 2022.

Blackstone, the world’s largest alternative asset manager, said earlier this month that it is capping withdrawals at its flagship private credit fund as redemption requests surged in the April–June period. It reassured investors that limiting drawdowns would boost long-term gains.

Partners Group, the Swiss-listed fund manager, halted redemptions from its Global Value SICAV fund at 5 percent after withdrawal requests reached almost 10 percent.

David Layton, CEO of Partners Group, said the majority of withdrawals are coming from the retail side, which accounts for about 20 percent of overall investments.

“What you’re doing is you’re balancing the needs of certain investors—a small percentage of the fund that would like to get liquid—with the needs of the remaining segment of the investor population that would like to see that fund continue to invest and continue to compound,” Layton said in a June 3 interview with Bloomberg TV.

The Swiss private markets juggernaut later shot down reports that it would cap more fund withdrawals following a spike in drawdown requests.

“Partners Group has no intention of altering any documented liquidity mechanisms and has no plans to freeze any of its evergreen vehicles, given their portfolios are healthy and they have sufficient liquidity in line with the target allocations,” it said in a June 12 statement.

Systemic Risk ‘Less Pronounced’

Concerns that private credit could be the next subprime meltdown after 2008 and 2009 have been widespread, fueled by growing retail participation and the “SaaSpocalypse.”

Private credit is widely exposed to the software sector, accounting for up to 20 percent of its loans. When software stocks were hammered earlier in the year due to worries that artificial intelligence would upend business models, the private credit industry also took a beating.

But a chorus of market watchers argues that systemic risks are minuscule.

“Systemic risk appears far less pronounced than between sub-prime and the financial system in 2008,” LSEG analysts said in a June 15 analysis.

“We note that [private credit] largely withstood the Covid and Ukraine shocks in 2020-22 and that both lenders and borrowers are well aware of the risks involved in these loans, whence the covenant-protection is generally greater.”

Investors seem to agree, as private credit stocks joined the broader market rally over the last few days.

Still the bounce remains modest amid YTD declines...

Tyler Durden Fri, 06/19/2026 - 16:15

Fresh off helping the New York Knicks win their first NBA title since 1973, Jalen Brunson has been interviewed by everyone. Including the youth.

Michael Sarian is accused of diverting millions of dollars from hospitals in Florida and other states into personal accounts.

A controversial lefty New York congressional candidate is offering covered World Cup tickets to campaign volunteers — and free ice cream to early voters — seemingly running afoul of federal election laws, and potentially FIFA, The Post has learned. Experts said the freebies offered by Darializa Avila Chevalier’s insurgent campaign appear to violate Federal Election...

Nick Robinson plays the romantic interest who apparently isn’t aware that he’s being a total creep.

Brazil is required to respond against Haiti on Friday.

The chief backer of California's billionaire tax initiative, Dave Regan, launched a blistering attack on Gavin Newsom, accusing the governor of cozying up to billionaires to bankroll a future White House bid.

These shoppers are bananas.

The Court of Appeals shot down a bid by three elderly jurists challenging an 1869 law that sets the mandatory retirement age at 76, saying it violates their rights.

"People, I think fail to realize the stress that is involved in that profession, that job, and, and how professional they are."

Page Six broke down the beloved actor's career and run-ins with the law.

Page Six broke down the beloved actor's career and run-ins with the law.

Sometimes the hardest thing to win in this city isn't a championship — it's a reservation.

Kendrick Perkins has a new job.

Former Seahawks star Marshawn Lynch delivered a hype speech before Friday’s World Cup match between the US and Australia at Lumen Field. Lynch made an appearance on “The Men in Blazers Show,” where he discussed the highly touted clash at the stadium he called home for seven seasons of his NFL career. Former Seahawks star...

"To George and Laura, Bill and Hillary — we're grateful for your friendship, counsel, and devotion to this country," Obama posted on X.

Tournament being staged across the US, Canada and Mexico is expected to drive estimated $32 billion in additional US consumer spending alone.

The sudden release of supply helped drive oil sharply lower from its spring highs and briefly pushed gasoline below $4 a gallon in parts of the US.

The Braves have gotten a reinforcement at catcher.

AI Doomsday Warnings Distract From More Imminent AI Concerns

Authored by Daniel Nuccio via The Brownstone Institute,

AI is everywhere. It’s getting incorporated into everything. That’s simply progress, we’re told. And therefore we need to embrace it, lest we look like a Luddite and let China win (whatever that means).

Yet, simultaneously, a lot of people also are afraid because of AI. Very afraid. And sometimes, we’re told that we should be afraid too.

However, in public discourse surrounding AI, there often can be a lack of detail regarding what specifically we’re supposed to be afraid of. Sometimes it is not even clear what is meant by the term “AI.”

Technically speaking, as I have touched on previously, one could argue (as some older computer scientists do) that AI is an umbrella term for a family of algorithms based in math that sometimes dates back more than a half-century. 

Practically speaking, numerous programs we’ve been living with for years like Google Maps and Amazon’s recommender system can be thought of as AI despite their lack of novelty. Yet, in public discourse, the term AI tends to refer to generative AI (e.g, ChatGPT), as well as any number of hypothetical future programs that will do everything humans can do but better, will therefore both solve all our problems while also putting most of us out of work, and also eventually just might decide to go full Skynet on us unless they decide that we’re not worth the trouble.

(Sounds pretty sexy. Perhaps someone should make a series of movies about it. Perhaps people will even like two out of five of them.)

Unfortunately, though, these more hyperbolic, sci-fi depictions of the threat(s) posed by AI tend to get more attention than, and consequently distract from, more realistic and more imminent threats pertaining to privacy, freedom, autonomy, and even just a way of life many of us have come to enjoy. 

Automatic license plate readers, facial recognition, digital grandmothers, mandatory drunk and distracted driving detection programs, any of the technologies “grandson” was shouting about in “Autonomous Delivery Robot,” and wearable recording devices that transcribe and process in-person conversations for the anti-social and easily distracted are just of a few of the more realistic threats that come to mind. (And this by no means is a complete list).

Therefore, I tend to appreciate when members of our ruling class can take a morning to have a measured conversation about fairly well-defined threats posed by this technology (or suite of technologies), as was done at the US House of Representatives’ Cybersecurity and Infrastructure Protection Subcommittee’s June 4 meeting on the “AI Security Landscape.”  

Superficially, the meeting’s discussion could probably be framed in terms of “Is the greatest threat posed by AI an external one in the form of foreign hackers looking to exploit vulnerabilities in the software controlling the United States’ critical infrastructure or an internal one born from the lack of regulation and accountability for AI’s use at home?”

From watching the discussion, however, it seemed less like a matter of “either or” and more like an uncontested response of “Yes and…”

Sandra Joyce of Google, Frontier Model Forum executive director Chris Meserole, and Corridor Security Inc. CEO and co-founder Jack Cable provided testimony regarding how AI is transforming the cybersecurity landscape as digital weapons fall into the hands of the cyber-barbarians at the gates who will use those weapons to find vulnerabilities in our critical infrastructure and/or deploy ransomware attacks.

“This technology has impacted cybersecurity in profound ways for both the defender and the attacker,” stated Joyce.

“[H]ackers have more powerful tools than ever,” Cable noted, naming Mythos and GPT-5.5 specifically.

“These models aren’t just hype,” he warned.

“They are truly starting to rival or exceed humans on security tasks and do so at an unprecedented scale.”

Joyce suggested “threat actors” don’t even need something like Mythos and can be quite capable of doing a lot of damage with an older program.

Emphasizing the threats from within, Electronic Frontier Foundation senior policy analyst Matthew Guariglia stated, “The question is not how do we reign in AI, it’s how do we reign in the agencies that would unleash AI on the American public?”

In his testimony, Guariglia highlighted how the US national security state already uses a variety of tools that collect data on people without probable cause and that can make “inferences about a person’s politics, personal life, religion, and geolocation, sometimes inaccurately with major consequences.” 

Furthermore, Guariglia said, “AI also has a track record of getting things wrong, from false citations on legal briefs to a major AI mistake that sent DHS recruits to the field without proper training.” 

“There are likely more consequential examples that we don’t even know about because of classification that would prevent a more thorough accounting,” he added.

Similarly, Rep. Delia Ramirez (D-IL) observed, “We’re watching AI-powered monitoring systems spread to schools, to public housing, to hospitals with no transparency about how they work, no ability to challenge them, and no recourse when they’re wrong.”

In a later exchange concerning a possible scenario in which an AI program designates a city’s water supply as compromised when it is in fact fine and subsequently restricts the ability of the city’s residents to access water, Guariglia and Ramirez suggested that within the confines of current US law, transparency about how the problem occurred would likely be left up to the discretion of the city implementing the system while the question of who can be held accountable is a rather nebulous one.

Despite not quite being as sexy as battling T-800s in the streets for our lives and our livelihoods, more ransomware attacks, a further erosion of our privacy, and a lack of required transparency and accountability when HAL makes an oopsy and shuts off everyone’s water all sound pretty serious even if these things don’t quite warrant mass hysteria or a movie franchise. Perhaps they are even sufficient for reasonable concerns over the current zeitgeist to incorporate AI into everything. And maybe, just maybe, they provide reason to make us rethink our decision to connect everything in modern life to the internet.

Tyler Durden Fri, 06/19/2026 - 15:30