Fitch Ratings’ U.S. Private Credit Default Rate (PCDR) reached 6.3% for the trailing 12 months (TTM) ended Q3/26, the highest quarterly default rate on record, up from 6.0% in Q2/26 and flat from August.
The PCDR has risen every quarter since Q3/25. Fitch recorded 27 private credit default events from 20 new unique defaulters in Q3/26, bringing the TTM total to 91 unique defaulters, up from 84 in Q2/26.
“Private credit default rates remained elevated in Q3/26, with stressed maturity extensions, interest deferrals, and payment-in-kind introductions continuing to account for most default events,” Lyle Margolis, head of private credit for U.S. Corporates, said. “Persistently high real interest rates are maintaining pressure on highly leveraged borrowers’ debt-service capacity and refinancing options.”
In Q3/26, interest deferrals and payment-in-kind (PIK) introductions accounted for 13 default events, maturity extensions under stress accounted for 10 events, uncured payment defaults accounted for one, and bankruptcy liquidations and out-of-court restructurings accounted for three. On a TTM basis, interest deferrals and PIK introductions represented 50% of default events, 38% for maturity extensions under stress, 8% for uncured payment defaults, and 4% for bankruptcies, liquidations, and out-of-court restructurings.
Among the largest PCDR sectors, industrials and manufacturing and consumer products and services had the highest default rates, at 9.7% each. Healthcare providers had the highest TTM default count, with 16 unique defaulters, although its default rate declined to 8.7% from 9.4%. Technology software had the lowest default rate among the largest PCDR sectors, at 0.6%, down from 1.2%. Fitch has recorded multiple defaults from technology-driven businesses not classified as Technology Software.
The PCDR comprises the Model-Based Credit Opinion (MCO) and Privately Monitored Rating (PMR) portfolios. PMRs are ratings generally used by insurance companies that require loan-level ratings for regulatory capital purposes. MCOs are credit opinions that inform ratings on pooled assets, such as middle-market CLOs. The increase in the PCDR 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%. The decline was due to fewer defaults and growth in the denominator due to the rapid expansion of Fitch’s PMR portfolio.
