Steffen Meister, chair of Partners Group, has warned that private credit default rates could surge sharply as artificial intelligence reshapes economic activity, the Financial Times reported. Meister told the paper that lenders face greater downside risk from AI-driven disruption but may capture limited upside from the transformation. He explained that AI could widen corporate performance divergence, with some companies thriving while others struggle significantly, potentially affecting private credit more than private equity.

Investor scrutiny of the roughly $2 trillion private credit market has intensified amid concerns about weakening credit quality and exposure to software companies facing AI disruption. Recent high-profile bankruptcies like First Brands and Tricolor have amplified market anxiety. Default rates averaged just 2.6% annually over the past decade, but Meister noted lenders built portfolios assuming low defaults before applying leverage.

JPMorgan reduced loan values to private credit funds, while BlackRock limited withdrawals from a debt fund amid surging redemptions. Blackstone's private credit fund BCRED also saw withdrawal spikes.