FS KKR shares plunged 15% after the private credit fund reported a sharp increase in troubled loans, with markdowns exposing mounting stress in debt extended to unlisted companies. The fund's performance reflects growing strains in the private credit market, where rising interest rates and economic uncertainty have pressured borrowers.

Markdowns on distressed assets have accelerated as companies struggle with higher borrowing costs and reduced access to capital. The fund, managed by KKR, has faced challenges in its portfolio of leveraged loans and direct lending investments. These markdowns signal potential losses for investors who have poured money into private credit as an alternative to traditional fixed income.

The selloff underscores the vulnerability of private credit strategies in a tightening financial environment. With defaults rising and asset values under pressure, investors are reassessing exposure to unlisted company debt. The market reaction suggests heightened concerns about the sustainability of leveraged lending in the current economic climate.