Fitch Rating’s U.S. Private Credit Default Rate (PCDR) declined to 5.2% for the trailing 12 months (TTM) ending October 2025, down from 5.4% in September. The PCDR comprises two components: the Privately Monitored Rating (PMR) default rate and the Model-based Credit Opinion (MCO) default rate. In October, the PMR default rate fell to 7.7%, Fitch’s lowest published rate of the year for this component. The MCO default rate also edged down slightly to 4.3% from 4.4% in September.
Smaller companies continue to default at a higher rate. For the TTM period ending October 2025, issuers in the PCDR generating up to $25 million EBITDA recorded a default rate of 10.9%, over three times higher than the 2.9% rate for mid-sized peers with EBITDA between $25 million and $50 million. Smaller issuers may be less able to absorb rising costs and market shocks due to limited resources and flexibility.
In October, Fitch recorded six private credit default events in the PCDR, including four new unique defaulters. Two of the six default events involved issuers that had already defaulted at least once before in the TTM period. Fitch counts each unique defaulter only once in the headline TTM rates, even when that unique defaulter is involved in multiple defaults within the TTM period. Of the six new default events, four involved the introduction of payment-in-kind (PIK) interest in lieu of cash interest, one resulted from a stressed maturity extension, and another from an uncured payment default.
The consumer products sector added two new unique defaulters in October, raising its total to six unique defaulters over the TTM period. At 8.8%, the sector now has the highest default rate among the top five PCDR sectors by issuer count. These defaulters underscore weakening sector conditions Fitch identified in its April retail and consumer products outlook revision to Deteriorating from Neutral. New tariffs, rising costs, and weakening consumer sentiment amplify operational and financial pressures especially for weaker issuers in discretionary categories.
Healthcare providers lead the PCDR with 10 defaulters over the TTM period. The sector’s default rate is 6.2%. For-profit hospitals and diversified providers face less risk relative to providers heavily reliant on Medicaid revenue due to higher commercial insurance exposure, but policy shifts could pressure even these operators over the medium term.
Fitch recorded 80 total default events generated by 64 unique defaulters in the PCDR over the TTM period ending October 2025.
Interest payment deferrals and the introduction of PIK in lieu of cash interest drove 56% of default events. Stressed maturity extensions accounted for 25% and uncured payment defaults represented 11% of default events. The remaining 8% involved bankruptcies, liquidations, and out-of-court restructurings where sponsors walk away from investments.
Fitch recorded three default events in the MCO portfolio in October, all from new unique defaulters, bringing the TTM total to 44 default events from 41 unique defaulters. Within the PMR default rate, Fitch recorded one new unique defaulter and three default events in October, bringing the TTM total to 23 unique defaulters accumulating 36 total default events.
Source: Fitch Ratings
