Updated

Updated · Apollo Global Management · Jun 25

Smaller Private Credit Funds Face Higher Stress Since 2022 as Rates Hit Weaker Borrowers

Updated

Updated · Apollo Global Management · Jun 25

Smaller Private Credit Funds Face Higher Stress Since 2022 as Rates Hit Weaker Borrowers

2 articles · Updated · Apollo Global Management · Jun 25

Higher rates since 2022 have concentrated private-credit stress in smaller funds, which are proving more exposed as leveraged borrowers come under heavier repayment pressure.
MSCI data cited by Apollo show those funds lend to smaller, weaker companies and run less diversified portfolios, leaving less cushion when individual loans deteriorate.
Software-focused private credit funds look especially vulnerable because their borrowers carry higher leverage and lower coverage ratios than other sectors.
The pattern points to a broader divide in private markets, with fund size, borrower quality and sector mix increasingly determining how rate pressure is absorbed.

Sources

As smaller funds falter, are we witnessing a great wealth transfer to distressed-debt specialists and market giants?

With investors rushing for the exits, could the $2.6 trillion private credit boom be on the verge of its first major collapse?

Is AI the hidden threat that could trigger a cascade of defaults in the highly-leveraged private software sector?

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