Key Takeaways
- • MSCI data show private credit funds have marked down more than 10% of their loans by at least 50%, with writedowns at their highest level since the aftermath of the COVID-19 pandemic, according to a report released May 12, 2026.
- • Smaller private debt funds are experiencing the most borrower distress, with 13% of their loans valued below 50 cents on the dollar.
- • Private debt fund returns slumped to 1.8% in Q4 2025 from 3.7% six months earlier, per MSCI's calculation method, which strips out investor inflows and outflows.
- • Carlyle, Blackstone and BlackRock have recently cut the value of their credit funds, while regulators have warned about systemic risks from major banks lending to these asset managers.
- • MSCI found that a third of investors lack access to private market data they fully trust, and that delayed reporting has contributed to investors exiting listed business development companies (BDCs).
Summary
Private credit funds have marked down more than a tenth of their loans by at least 50%, according to new data from MSCI, as corporate borrowers in the $3.5 trillion market contend with growing debt burdens. Reuters reported that MSCI released the findings in a report on Tuesday, May 12, 2026. MSCI said a loan valuation below 50% is "a level typically associated with deep distress or risk of restructuring," and cited a sustained period of relatively high interest rates as a key reason borrowers are struggling.
The writedowns are the highest since the aftermath of the COVID-19 pandemic. MSCI found that smaller private debt funds bear the heaviest borrower distress, with 13% of their loans now valued below 50 cents on the dollar. The underlying writedown data was collected in the third quarter of 2025, the most recent available from private credit funds, which often report with a long lag.
The pressure is also visible in performance. Private debt fund returns slumped to 1.8% in the fourth quarter of 2025 from 3.7% six months earlier, based on MSCI's methodology, which separates investment performance from capital flows into and out of funds. MSCI said delayed reporting by private debt funds has contributed to investors exiting stock market-traded business development corporations (BDCs).
The valuation cuts come as large managers including Carlyle, Blackstone and BlackRock have marked down the value of their credit funds in recent days. Regulators have also warned about systemic risks arising from major banks lending to these asset managers. A separate MSCI survey found that a third of investors lacked access to private market data they fully trusted.
The writedowns are the highest since the aftermath of the COVID-19 pandemic. MSCI found that smaller private debt funds bear the heaviest borrower distress, with 13% of their loans now valued below 50 cents on the dollar. The underlying writedown data was collected in the third quarter of 2025, the most recent available from private credit funds, which often report with a long lag.
The pressure is also visible in performance. Private debt fund returns slumped to 1.8% in the fourth quarter of 2025 from 3.7% six months earlier, based on MSCI's methodology, which separates investment performance from capital flows into and out of funds. MSCI said delayed reporting by private debt funds has contributed to investors exiting stock market-traded business development corporations (BDCs).
The valuation cuts come as large managers including Carlyle, Blackstone and BlackRock have marked down the value of their credit funds in recent days. Regulators have also warned about systemic risks arising from major banks lending to these asset managers. A separate MSCI survey found that a third of investors lacked access to private market data they fully trusted.
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