Private credit distress rises as non-accruals climb

Industry
โดย PitchBook News·US·Read original
Summary · why it matters

Non-accrual debt across US-registered business development companies jumped to 1.9% of total debt at cost in Q1 2026, up 52 basis points from the prior quarter, signaling growing borrower distress in private credit. Adjusted non-accrual exposure, counting all debt owed by borrowers with at least one non-accrual tranche, rose to 3.3% of total debt at cost, up 116 basis points from Q4 2025. Among the ten largest publicly traded BDCs, reported non-accrual debt reached 3.95% of total debt at cost in Q2, up 20 basis points, while adjusted exposure rose 54 basis points to 5.95%. The number of borrowers with at least one non-accrual instrument climbed to 356 in Q1 2026, representing 4.69% of all borrowers, up from 4.26% a year earlier. Two borrowers, Medallia and Inovalon, accounted for $4.4 billion of the Q1 2026 non-accrual total.

Impact on stocks 8

Financials▼ · 8 stocks
Ares Capital Corporation
ARCC
▼ NegativeCapitalrelevance

Ares Capital is a major BDC; rising non-accruals signal credit deterioration affecting its portfolio.

FS KKR Capital Corp
FSK
▼ NegativeCapitalrelevance

FS KKR Capital Corp faces increased non-accruals, indicating borrower distress in its loan book.

Golub Capital BDC Inc
GBDC
▼ NegativeCapitalrelevance

Golub Capital BDC's non-accrual rates rise, reflecting credit quality issues.

Goldman Sachs BDC Inc
GSBD
▼ NegativeCapitalrelevance

Goldman Sachs BDC sees higher non-accruals, impacting earnings and asset quality.

Theme Impact 1

Off-coverage companies 2

Inovalon HoldingsPrivate▼ Negative
Capitalrelevance

Inovalon is named as one of two borrowers accounting for $4.4B of non-accruals, indicating financial distress.

Medallia, Inc.Private▼ Negative
Capitalrelevance

Medallia is named as one of two borrowers accounting for $4.4B of non-accruals, indicating financial distress.

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