US private credit default rate highest since August 2024, Fitch says

By Matt Tracy

Feb 23 (Reuters) - Defaults hit 5.8% last month among U.S. corporate borrowers in the private credit market for the 12 months ending in January, their highest rate since August 2024, credit rating agency Fitch Ratings said on Monday.

• Fitch's monitor recorded 11 defaults in January, which was nearly double the average of 5.9 monthly defaults in 2025. It was also the highest number of defaults since 13 recorded in November.

• The 11 defaults in January brought the total number of defaults to 89 among 74 unique issuers over the trailing 12 months, according to Fitch.

• Healthcare providers led default activity with 13 unique defaulters over the same period, Fitch noted. The consumer products sector followed closely with eight unique defaulters over this period.

• Fitch's Monday report follows a February 20 report by Morningstar DBRS that ratings downgrades among private credit borrowers reached a new high in February. The number of downgrades was 3.3 times the upgrades this month, up from 2.4 times a year ago, according to Morningstar.

• It also follows private capital manager Blue Owl's OBDC.N decision on February 18 to halt investor redemptions at one of its private credit funds, and instead sell the underlying loans at a slight discount as part of its efforts to repay investors. This comes amid market-wide concerns around AI disruption of companies in the software sector.

• There were only three unique defaulters in the software sector for the 12 months ending in January, Fitch said on Monday.