Private Debt Defaults Set to Climb as Middle-Market Firms Wobble

Defaults are poised to rise across the $1.7 trillion private credit market next year as a growing number of middle-market firms are experiencing stress, according to Kroll Bond Rating Agency.

A record 61 borrowers with private debt have a rating of CCC-, KBRA said in a report on Tuesday, which analyzed more than 2,200 middle-market companies backed by private equity in the 12 months through September. The firm tacks on that label for borrowers “facing severe operational or liquidity challenges.”