The most significant risks lie ahead.
Rising defaults and loss severity
Default rates are likely to increase, particularly in asset-light sectors such as software, where recovery values can be significantly lower.
Duration risk
Capital is remaining invested for longer than expected, increasing exposure to downside risks and limiting exit options.
Market tipping point
Redemptions, liquidity pressures and structural constraints could create broader spillover effects across credit markets.
Private credit cannot be viewed in isolation
The traditional separation between public and private credit is breaking down.