3 October 2023
Bank of America warns of a surge in private credit defaults, predicting a rate of 5% by early 2024, exceeding those in the syndicated loan market if high-interest rates persist. The looming issue stems from an anticipated one-third of deals maturing within the next two-and-a-half years and contrasts with a 3% estimated default rate for broadly-syndicated loans. Unaddressed issues within private debt, especially unitranches and older, highly levered deals, risk materializing in the near term, posing substantial financial threats.