Private credit market default rates vary wildly, with Fitch Ratings this week raising its default rate to a record 6.3%, while Pimco's "shadow" default rate indicator shows that default rates for Business Development Companies (BDCs) targeting retail investors have climbed to 19%. Meanwhile, investment bank Houlihan Lokey's calculations suggest that, on a loan-size weighted basis, the default rate remains below 1%.

This $1.8 trillion asset class lacks a unified data infrastructure and a consensus definition of "default," complicating market judgments on risk. Retail investors' concerns about borrower health continue to escalate, and redemption pressure has already formed. The Federal Reserve's interest rate hike on Wednesday may further exacerbate financing cost pressures for highly leveraged borrowers.