History Rhyming

The fact that private credit defaults in the United States hit 9.2% in 2025, sounds a lot like the leadup to money market funds "Breaking the Buck" in 2008. > The default rate among U.S. corporate borrowers of private credit rose to a record 9.2% in 2025, ​according to a report Friday by credit rating agency ‌Fitch Ratings. > > In its monitor of 302 companies with outstanding private credit debt, Fitch recorded 38 defaults among 28 different borrowers. The 9.2% default rate in ​2025 follows a previous record 8.1% rate of defaults ​in 2024. > > Smaller issuers with $25 million or less in earnings made ⁠up the majority of last year's defaults, which were diversified ​among sectors, according to the report. > > ……… > > Most of ⁠the private credit loans were floating rate and tied to the federal funds rate, which has ​persisted at a high level over the past three ​years. ⁠Fitch pointed to this as a catalyst for last year's defaults. There are a lot of companies out there who could only service their debts when rates were near 0%. They are now insolvent, and there is a non-zero chance that this will take down the private credit firms. This is not good.