US private credit defaults to ease in 2026, but fragility to persist, says BofA

The Punchline

Strategists at BofA Global Research predict that private credit defaults will decrease in 2026 due to falling interest rates. Despite this optimism, they caution that the sector remains one of the most fragile segments of the U.S. credit market.

Why You Should Read This

The insights provided by BofA on private credit defaults and market fragility are crucial for stakeholders looking to navigate investment risks in a changing interest rate environment.

Who This Is For

This article is geared towards institutional investors, credit analysts, and fund managers who monitor trends in the private credit market.

Investor Implications

Lower defaults may hint at improved conditions for private credit investors, yet the underlying fragility suggests caution in portfolio management. Investors should prepare for potential volatility and reassess risk profiles in their strategies.