Credit Benchmark: U.S. Corporate Default Risk Rises 54% Over Decade as Private Credit Vulnerabilities Grow

Credit Benchmark, a London-headquartered provider of consensus credit risk data, released its U.S. Credit Spotlight 2026 on October 22, 2026. Drawing on consensus credit risk data from more than 40 global financial institutions, the report finds that average one-year default risk for U.S. corporations has climbed from 35 to 54 basis points over the past decade, while financial institutions have remained relatively stable. Both measures have largely leveled off over the past six months, according to the report.

The report flags private credit as a key area to watch. Default risk among loans held by business development companies has deteriorated 10% over the past two years, despite longer-term improvement in BDC-level credit quality. While most rated U.S. BDCs carry investment-grade ratings, their underlying rated borrowers are predominantly non-investment grade, concentrated in the single-B category. The report also notes increased use of payment-in-kind arrangements, reflecting pressure on borrowers facing higher financing costs and AI-driven disruption.

AI investment is producing an uneven credit landscape. Semiconductor manufacturers and AI infrastructure providers are benefiting from increased investment, whereas default risk has risen 43% for IT services and consulting firms and 92% for customer experience and business process outsourcing providers over three years. The report warns that hyperscaler capital expenditure on data centers and computing capacity could increase leverage and leave lenders exposed if demand or investment returns fall short.

Trade pressures are weighing on several industries. Trucking, railroads and chemicals have seen the largest deterioration in default risk over the past year, while mining, computer hardware and aerospace and defense have improved. Regionally, the Rocky Mountain region has the highest average corporate default risk at 66 basis points.

Crumpler, CEO of Credit Benchmark, said: "The U.S. credit market isn't moving in one direction, and that's what makes this cycle particularly challenging." The report also highlights that changes to bank regulatory capital requirements could alter banks' lending capacity and competitive position relative to private credit providers, with implications for where credit exposure sits across the financial system.