Fitch Raises Private Credit Default Rate to Record 6%, Leaving U.S. Insurers With $849 Billion Exposure

Fitch recorded the highest default rate on record for private credit at 6%, with 11% of loans in the market paying interest by taking on new debt instead of generating cash.

Secondary market investors are dumping positions at discounts of 30% to 65%, directly impacting U.S. life insurers that hold $849 billion in the asset class. The rating agency warned the next crisis will likely originate outside the banking system.