Private Credit Defaults Hit Record 6.3% in Q3: Fitch
Fitch’s private credit default rate reached 6.3% for in the third quarter. That is the highest quarterly reading on record, up from 6% in the second quarter and unchanged from August. The rate has risen every quarter since the third quarter of 2025.
Fitch recorded 27 private credit default events in the third quarter from 20 new borrowers. That brought the trailing 12-month total to 91 unique defaulters, up from 84 in the second quarter.
Most of the defaults were less severe events. Counting only bankruptcies, liquidations and out-of-court restructurings, the default rate fell to 0.3% from 0.4% in the second quarter.
Fitch’s overall rate has two components. The increase came from what Fitch calls model-based credit opinions, which it uses to support ratings on pooled assets such as middle-market collateralized loan obligations. The default rate for that group rose to a record 5.7% from 4.9% in the second quarter. It was the eighth straight monthly increase.
The second component moved the other way. The default rate for privately monitored ratings fell to 8% from 9.4% in the second quarter. Fitch typically produces those ratings for insurance companies, which need them on loans to calculate regulatory capital.