Private credit funds have sharply increased loan write-downs as borrower stress builds across the $3.5tn asset class, according to new data from MSCI, highlighting growing pressure in a market long buoyed by strong investor demand, according to a report by Reuters.
MSCI found that more than 10% of loans tracked in its dataset have been marked down by at least 50%, a level it described as typically associated with deep financial distress or potential restructuring. The findings point to the impact of persistently higher interest rates and rising debt servicing costs on corporate borrowers.
That writedowns are now at their highest level since the period following the Covid-19 pandemic according to MSCI, with smaller private credit managers experiencing the most acute stress. In that segment, roughly 13% of loans are now valued below 50 cents on the dollar.
Data used in the analysis was drawn largely from the third quarter of 2025, reflecting the inherent reporting lag in private markets, where performance disclosure tends to be delayed.
MSCI also noted that returns across private debt strategies have softened, falling to around 1.8% in the fourth quarter of 2025 from 3.7% six months earlier, based on its methodology separating investment performance from investor cash flows.
The valuation pressures come as major alternative asset managers, including Carlyle, Blackstone and BlackRock, have recently adjusted credit valuations in response to deteriorating borrower conditions. Regulators have also stepped up warnings about potential systemic risks linked to rising interconnectedness between banks and private credit providers.
The report further highlighted that delayed transparency in private credit markets may be contributing to investor caution, particularly in listed business development companies (BDCs), which have experienced increased outflows.
A survey included in the MSCI report found that around one-third of investors believe they do not have reliable access to private market data, underscoring ongoing concerns about transparency in the asset class.
