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Private credit defaults fall to 2.41% as small borrowers worsen

Proskauer's index of 746 US senior-secured and unitranche loans shows sub-$25m EBITDA borrowers defaulted at 2.2%, up from 1.9%, while the largest fell to 1.7%.

At a glance

  1. The index, which tracks US senior-secured and unitranche loans, covered 746 loans with $205.7 billion in original principal.
  2. For fund selectors and direct-lending allocators, Proskauer's breakdown shows the smallest companies deteriorated while the largest improved, so loan-level default and watchlist data by EBITDA cohort and sector is the more useful request.
  3. Borrowers with EBITDA below $25 million defaulted at 2.2% in the third quarter, up from 1.9% in the second.

The US private credit default rate fell to 2.41% in the three months to September 2026 from 2.51% in the second quarter, the second consecutive quarterly decline, according to Proskauer's Private Credit Default Index.

The index, which tracks US senior-secured and unitranche loans, covered 746 loans with $205.7 billion in original principal. Alternative Credit Investor reported the index figures.

For fund selectors and direct-lending allocators, Proskauer's breakdown shows the smallest companies deteriorated while the largest improved, so loan-level default and watchlist data by EBITDA cohort and sector is the more useful request.

Borrowers with EBITDA below $25 million defaulted at 2.2% in the third quarter, up from 1.9% in the second. Companies with EBITDA of $25 million to $49.9 million edged down to 3.3% from 3.4%. Those with at least $50 million fell to 1.7% from 2.4%. In the second quarter the smallest cohort defaulted half a point less than the largest. In the third it defaulted half a point more.

Stephen Boyko, partner and co-founder of Proskauer's private credit group, said trailing 12-month defaults rose, software and technology defaults climbed, and performance varied by sector and borrower size.

Small borrowers worsened while the largest improved

Default rate by borrower EBITDA cohort, Q2 to Q3 2026

EBITDA $25M-$49.9M 3.4%EBITDA $50M+ 2.4%EBITDA <$25M 1.9%3.3%1.7%2.2%Q2 2026Q3 2026EBITDA $25M-$49.9M 3.4%EBITDA $50M+ 2.4%EBITDA <$25M 1.9%3.3%1.7%2.2%Q2 2026Q3 2026EBITDA $25M-$49.9M 3.4%EBITDA $50M+ 2.4%EBITDA <$25M 1.9%3.3%1.7%2.2%Q2 2026Q3 2026
Source: Proskauer Private Credit Default Index via Alternative Credit Investor
Show as table
ItemQ2 2026Q3 2026Change
EBITDA <$25M1.9%2.2%+0.3%
EBITDA $25M-$49.9M3.4%3.3%−0.1%
EBITDA $50M+2.4%1.7%−0.7%

Reported by the Distressed & restructurings desk from Alternative Credit Investor. Published . Corrections

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