In the $3 trillion private credit market, the ‘shadow default’ rate is increasing as more money chases lower-quality deals

In the $3 trillion private credit market, the ‘shadow default’ rate is increasing as more money chases lower-quality deals

The $3 trillion private credit market is showing signs of deterioration as the "shadow default" rate nearly triples to 6.4%, indicating lenders are increasingly forced to renegotiate deal terms mid-contract. Despite rising enterprise values, earnings growth is slowing and company leverage is increasing, suggesting investors are chasing lower-quality deals in a market flooded with capital seeking returns.