See also: https://alternativecreditinvestor.com/2025/10/22/us-banks-ex...
Discussion Highlights (20 comments)
FrustratedMonky
The US Ponzi scheme coming to an end. It works great while everything is going up. 2008 Financial Crisis was triggered by Oil prices. There were lots of problematic structural elements that were fine if nobody looked close. Oil was just the sideway hit on the building to knock it over. Just takes a nudge to collapse. And here we go again.
blakesterz
"Most of the private credit loans were floating rate and tied to the federal funds rate, which has persisted at a high level over the past three years. Fitch pointed to this as a catalyst for last year's defaults." I wanted to dismiss that and say ... but it's not really historically high. I suppose it really is not IF you look WAY back. It actually has persisted at a relatively high level if you look back to 2009, which is more than a short time now. I guess it is fair to say the federal funds rate has persisted at a high level over the past three years now isn't it? https://www.macrotrends.net/2015/fed-funds-rate-historical-c... Also interesting to note, "Fitch recorded NO defaults in the software sector last year. The rating agency noted it categorizes software issuers into their main target market sectors when applicable."
cmiles8
Private credit is cracking and lending standards are tightening behind the scenes. If you’re not building cash reserves right now you’re going to wish you had. The distressed opportunities ahead go to whoever kept dry powder while everyone else was chasing growth. If your business is light on free cash flow (ie everyone in AI at the moment) buckle up as there are storm clouds ahead. If you’re running a business that relies on external cash (VCs, loans/bonds, etc) to keep things going things will get very ugly.
persecutor
Go figure. Employers don't want to pay living wages or hire anyone these days.
persecutor
Go figure. Employers don't want to pay living wages or hire.
flammafex
Stop paying rent. Stop going to work. Pirate everything. No constitution. No copyright. Starve the beast. Don't let anyone who bought into this way of life get away with robbing the rest of us. And don't let anyone who brought children into this cruelty hear the end of it: what they did was evil.
hnthrow0287345
People have cried wolf or been wrong about incoming crashes and bubble pops so many times that this signal -- whether it's a good signal or not -- simply won't change anything I do. I'm sure someone somewhere could make a trade off of this article and this signal is definitely for them.
bargainbin
Luckily debt will be solved by the power of AGI, right? Just one more data centre! One more GPU! It can nearly write a basic three tier application with only 10 critical security vulnerabilities all by itself! Definitely think we’re in for a rough year financial prospects wise, and doesn’t even feel like we recovered from the 2008 crash properly.
bArray
https://web.archive.org/web/20260312130613/https://www.marke... ^ Encase the link also responds with this for you: Access Denied You don't have permission to access "http://www.marketscreener.com/news/us-private-credit-defaults-hit-record-9-2-in-2025-fitch-says-ce7e5fd8df8fff2d" on this server.
rvnx
Pretty sure the solution that US politicians will find will be to create new dollars out of thin air, so instead of increasing taxes they increase the money supply. Of course this is going to increase prices, but then they can blame China / Russia / Iran whoever is the scapegoat at that time.
rglover
Misleading title* > The default rate among U.S. corporate borrowers of private credit rose to a record 9.2% in 2025 Emphasis added. Headline makes it sound like retail credit, not corporate specifically. *Edit: Not misleading, just an unfamiliar term/usage from my perspective. I'm not a finance guy so didn't know the difference and assumed others wouldn't either. Mea culpa .
computronus
Important to note that this is about "U.S. corporate borrowers of private credit", so companies and not individuals.
airstrike
Skip the blogspam and read the original article: https://www.reuters.com/business/us-private-credit-defaults-...
_ache_
What the hell ?! Nearly 10% ?! How can it be?! World wide, it seems to be around 4% since 2004. Page 22 (French but it's just numbers, you can read it). < https://www.eib.org/files/publications/thematic/gems_default... >
SpaceL10n
I'm not surprised. Weren't we getting signals like 3 or 4 months ago that used car repossessions were ticking up? That's a breaking point for folks. The economic boulder keeps rolling and I'm not wearing any shoes. Spiking the price of oil is definitely going to help. This too shall pass?
javcasas
I have been following this development for a couple weeks, and now it's on HN. How long until the elevator guy tells me about it?
JumpCrisscross
Yeah, I'm going down a bit of a rabbit hole this morning. Turns out Wells Fargo's $59.7bn of private-credit lending is equal to 44% of its CE Tier 1 capital [1]. Meanwhile, Deutsche Bank got back to being Deutsche Bank while I was not looking [2]. [1] https://www.sec.gov/Archives/edgar/data/72971/00000729712500... [2] https://www.reuters.com/business/finance/deutsche-bank-highl...
JumpCrisscross
Reason this number caught my eye: last year the Fed's stress tests found "loss rates from [non-bank financial institution] exposures (i.e., the percentage of loans that are uncollectible) were estimated at 7%, under a severe recession in scenario one" [1]. That's the scenario in which unemployment goes to 10%, home prices crash by 33%, the stock market halves and Treasuries trade at zero percent yield [2]. [1] https://www.mfaalts.org/industry-research/2025-fed-stress-te... [2] https://www.federalreserve.gov/publications/2025-june-dodd-f...
lizknope
I've never heard the term private credit so I googled it. > Private credit refers to loans provided to businesses by non-bank institutions—such as private equity firms, hedge funds, and alternative asset managers—rather than traditional banks . Is that correct? So if these companies go under does anyone care? If they go under are they a systemic risk to the economy like the banks in 2008 that got a taxpayer bailout?
cs702
Trouble has been brewing in private credit for quite a while, but lenders and investors have been reluctant to write anything down, resorting to all kinds of "extend and pretend" games to avoid write-downs.[a] tick-tock, tick-tock, tick-tock... --- [a] https://news.ycombinator.com/item?id=47351462
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Discussion Highlights (20 comments)
FrustratedMonky
The US Ponzi scheme coming to an end. It works great while everything is going up. 2008 Financial Crisis was triggered by Oil prices. There were lots of problematic structural elements that were fine if nobody looked close. Oil was just the sideway hit on the building to knock it over. Just takes a nudge to collapse. And here we go again.
blakesterz
"Most of the private credit loans were floating rate and tied to the federal funds rate, which has persisted at a high level over the past three years. Fitch pointed to this as a catalyst for last year's defaults." I wanted to dismiss that and say ... but it's not really historically high. I suppose it really is not IF you look WAY back. It actually has persisted at a relatively high level if you look back to 2009, which is more than a short time now. I guess it is fair to say the federal funds rate has persisted at a high level over the past three years now isn't it? https://www.macrotrends.net/2015/fed-funds-rate-historical-c... Also interesting to note, "Fitch recorded NO defaults in the software sector last year. The rating agency noted it categorizes software issuers into their main target market sectors when applicable."
cmiles8
Private credit is cracking and lending standards are tightening behind the scenes. If you’re not building cash reserves right now you’re going to wish you had. The distressed opportunities ahead go to whoever kept dry powder while everyone else was chasing growth. If your business is light on free cash flow (ie everyone in AI at the moment) buckle up as there are storm clouds ahead. If you’re running a business that relies on external cash (VCs, loans/bonds, etc) to keep things going things will get very ugly.
persecutor
Go figure. Employers don't want to pay living wages or hire anyone these days.
persecutor
Go figure. Employers don't want to pay living wages or hire.
flammafex
Stop paying rent. Stop going to work. Pirate everything. No constitution. No copyright. Starve the beast. Don't let anyone who bought into this way of life get away with robbing the rest of us. And don't let anyone who brought children into this cruelty hear the end of it: what they did was evil.
hnthrow0287345
People have cried wolf or been wrong about incoming crashes and bubble pops so many times that this signal -- whether it's a good signal or not -- simply won't change anything I do. I'm sure someone somewhere could make a trade off of this article and this signal is definitely for them.
bargainbin
Luckily debt will be solved by the power of AGI, right? Just one more data centre! One more GPU! It can nearly write a basic three tier application with only 10 critical security vulnerabilities all by itself! Definitely think we’re in for a rough year financial prospects wise, and doesn’t even feel like we recovered from the 2008 crash properly.
bArray
https://web.archive.org/web/20260312130613/https://www.marke... ^ Encase the link also responds with this for you: Access Denied You don't have permission to access "http://www.marketscreener.com/news/us-private-credit-defaults-hit-record-9-2-in-2025-fitch-says-ce7e5fd8df8fff2d" on this server.
rvnx
Pretty sure the solution that US politicians will find will be to create new dollars out of thin air, so instead of increasing taxes they increase the money supply. Of course this is going to increase prices, but then they can blame China / Russia / Iran whoever is the scapegoat at that time.
rglover
Misleading title* > The default rate among U.S. corporate borrowers of private credit rose to a record 9.2% in 2025 Emphasis added. Headline makes it sound like retail credit, not corporate specifically. *Edit: Not misleading, just an unfamiliar term/usage from my perspective. I'm not a finance guy so didn't know the difference and assumed others wouldn't either. Mea culpa .
computronus
Important to note that this is about "U.S. corporate borrowers of private credit", so companies and not individuals.
airstrike
Skip the blogspam and read the original article: https://www.reuters.com/business/us-private-credit-defaults-...
_ache_
What the hell ?! Nearly 10% ?! How can it be?! World wide, it seems to be around 4% since 2004. Page 22 (French but it's just numbers, you can read it). < https://www.eib.org/files/publications/thematic/gems_default... >
SpaceL10n
I'm not surprised. Weren't we getting signals like 3 or 4 months ago that used car repossessions were ticking up? That's a breaking point for folks. The economic boulder keeps rolling and I'm not wearing any shoes. Spiking the price of oil is definitely going to help. This too shall pass?
javcasas
I have been following this development for a couple weeks, and now it's on HN. How long until the elevator guy tells me about it?
JumpCrisscross
Yeah, I'm going down a bit of a rabbit hole this morning. Turns out Wells Fargo's $59.7bn of private-credit lending is equal to 44% of its CE Tier 1 capital [1]. Meanwhile, Deutsche Bank got back to being Deutsche Bank while I was not looking [2]. [1] https://www.sec.gov/Archives/edgar/data/72971/00000729712500... [2] https://www.reuters.com/business/finance/deutsche-bank-highl...
JumpCrisscross
Reason this number caught my eye: last year the Fed's stress tests found "loss rates from [non-bank financial institution] exposures (i.e., the percentage of loans that are uncollectible) were estimated at 7%, under a severe recession in scenario one" [1]. That's the scenario in which unemployment goes to 10%, home prices crash by 33%, the stock market halves and Treasuries trade at zero percent yield [2]. [1] https://www.mfaalts.org/industry-research/2025-fed-stress-te... [2] https://www.federalreserve.gov/publications/2025-june-dodd-f...
lizknope
I've never heard the term private credit so I googled it. > Private credit refers to loans provided to businesses by non-bank institutions—such as private equity firms, hedge funds, and alternative asset managers—rather than traditional banks . Is that correct? So if these companies go under does anyone care? If they go under are they a systemic risk to the economy like the banks in 2008 that got a taxpayer bailout?
cs702
Trouble has been brewing in private credit for quite a while, but lenders and investors have been reluctant to write anything down, resorting to all kinds of "extend and pretend" games to avoid write-downs.[a] tick-tock, tick-tock, tick-tock... --- [a] https://news.ycombinator.com/item?id=47351462