Key Takeaways
- • Fitch Ratings' U.S. Private Credit Default Rate (PCDR) reached a record 6.3% on a trailing 12-month basis ended Q3/26, up from 6.0% in Q2/26 and flat from August.
- • The PCDR has risen every quarter since Q3/25, with Fitch recording 27 default events from 20 new unique defaulters in Q3/26 alone.
- • The TTM unique defaulter count climbed to 91 from 84 in Q2/26, per Fitch.
- • Interest deferrals and payment-in-kind introductions accounted for 50% of TTM default events, while maturity extensions under stress accounted for 38%.
- • Industrials and manufacturing and consumer products and services posted the highest sector default rates at 9.7% each; the MCO portfolio default rate rose to a record 5.7% from 4.9%.
Summary
Fitch Ratings reported that the U.S. Private Credit Default Rate (PCDR) reached 6.3% for the trailing 12 months ended Q3/26, the highest quarterly default rate on record. The figure marks an increase from 6.0% in Q2/26 and was flat from August, and it extends a streak of quarterly increases that began in Q3/25.
Fitch recorded 27 private credit default events in Q3/26 from 20 new unique defaulters. On a TTM basis, unique defaulters totaled 91, up from 84 in Q2/26. Lyle Margolis, head of private credit for U.S. Corporates at Fitch, said default rates remained elevated, with stressed maturity extensions, interest deferrals and payment-in-kind (PIK) introductions accounting for most default events. He attributed the pressure to persistently high real interest rates, which are constraining the debt-service capacity and refinancing options of highly leveraged borrowers.
By event type, interest deferrals and PIK introductions accounted for 13 events in Q3/26 and maturity extensions under stress accounted for 10. On a TTM basis, interest deferrals and PIK introductions represented 50% of default events, maturity extensions under stress 38%, uncured payment defaults 8%, and bankruptcies, liquidations and out-of-court restructurings 4%.
Among the largest PCDR sectors, industrials and manufacturing and consumer products and services had the highest default rates, each at 9.7%. Healthcare providers recorded the highest TTM default count at 16 unique defaulters, although its default rate eased to 8.7% from 9.4%. Technology software had the lowest default rate among the largest sectors at 0.6%, down from 1.2%. Fitch noted multiple defaults among technology-driven businesses that are not classified as Technology Software.
The PCDR combines Fitch's Model-Based Credit Opinion (MCO) and Privately Monitored Rating (PMR) portfolios. The increase was driven by the MCO portfolio, where the default rate rose to a record 5.7% from 4.9%. The PMR default rate declined to 8.0% from 9.4%, which Fitch attributed to fewer defaults and growth in the denominator from the rapid expansion of its PMR portfolio.
Fitch recorded 27 private credit default events in Q3/26 from 20 new unique defaulters. On a TTM basis, unique defaulters totaled 91, up from 84 in Q2/26. Lyle Margolis, head of private credit for U.S. Corporates at Fitch, said default rates remained elevated, with stressed maturity extensions, interest deferrals and payment-in-kind (PIK) introductions accounting for most default events. He attributed the pressure to persistently high real interest rates, which are constraining the debt-service capacity and refinancing options of highly leveraged borrowers.
By event type, interest deferrals and PIK introductions accounted for 13 events in Q3/26 and maturity extensions under stress accounted for 10. On a TTM basis, interest deferrals and PIK introductions represented 50% of default events, maturity extensions under stress 38%, uncured payment defaults 8%, and bankruptcies, liquidations and out-of-court restructurings 4%.
Among the largest PCDR sectors, industrials and manufacturing and consumer products and services had the highest default rates, each at 9.7%. Healthcare providers recorded the highest TTM default count at 16 unique defaulters, although its default rate eased to 8.7% from 9.4%. Technology software had the lowest default rate among the largest sectors at 0.6%, down from 1.2%. Fitch noted multiple defaults among technology-driven businesses that are not classified as Technology Software.
The PCDR combines Fitch's Model-Based Credit Opinion (MCO) and Privately Monitored Rating (PMR) portfolios. The increase was driven by the MCO portfolio, where the default rate rose to a record 5.7% from 4.9%. The PMR default rate declined to 8.0% from 9.4%, which Fitch attributed to fewer defaults and growth in the denominator from the rapid expansion of its PMR portfolio.
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