Private‑credit portfolios are under pressure as the value of troubled loans climbs to levels last seen in 2017. An FT analysis of Solve data shows that the 20 largest publicly traded business‑development companies (BDCs) now mark non‑accrual loans at a median 2.8 % of cost, up from 2 % at the end of March. The increase signals borrowers who have stopped payments or whose lenders expect imminent default.

Golub Capital’s co‑chief executive, David Golub, warned that the industry is in a credit cycle and that “elevated credit stress” is real. Fitch Ratings last week noted a record default spike in July, and PitchBook LCD data shows major listed BDCs shrinking as impairments bite and loan sales outpace new commitments. KKR’s FS KKR Capital Group flagged 7.1 % of its book as troubled, while Blue Owl and Apollo’s MidCap Financial also reported higher writedowns.

Despite the headline gloom, many fund managers argue the drama is overstated. Blue Owl’s Craig Packer insists credit metrics remain healthy, and Ares’ Jim Miller says borrowers are “solid” with leverage matching a five‑year average. Yet it will be hard to sustain as the debt that financed 2020‑21 buy‑batches faces higher rates. Medallia, Cornerstone On Demand and Affordable Care have all seen loan values written down, and BDC shares like KKR’s and BlackRock’s have fallen more than 15 % in the past year.