Private credit facing 'clear signs' of rising stress, BofA Says

A Bank of America report indicates rising stress in the $1.7 trillion private credit market, with increasing default rates and borrowers deferring cash interest payments. Default rates in private debt exceed those in public credit, with over $1 billion in realized losses reported in the second quarter. Business development companies face $1.3 billion in unrealized losses, primarily from loans made during the low-rate environment of 2021. Additionally, 17% of deals are maturing in the next two years, requiring $170 billion in capital, although $160 billion in dry powder is available for direct lending.