US corporate defaults on privately placed debt increased in the second quarter of 2025, according to Fitch Ratings’ latest Private Credit Monitor, which recorded a rise in default rates among middle-market borrowers.
Covering approximately 1,200 corporate issuers, the report revealed a default rate of 5.5% in Q2, up from 4.5% in Q1. The agency identified eight defaults in Q2, doubling the four recorded in the previous quarter.
The majority of Q2 defaults were linked to maturity extensions by financially stressed companies, accounting for four out of eight defaults. Additionally, three defaults arose from interest deferrals and the adoption of payment-in-kind (PIK) instruments, while one default was classified as an uncured payment default.
The report also highlighted a 16% decline in US middle-market debt issuance during Q2, with new issuance dropping to $11.6bn from $13.7bn a year earlier. This middle market segment represents the bulk of private credit lending in the US.
Fitch noted that roughly 75% of the monitored private credit issuers belong to its rated middle market collateralised loan obligation (CLO) portfolio, with the remainder privately rated to support insurance company investments.
