Private credit funds slash loan values as borrower stress rises

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By Naomi Rovnick

LONDON, May 12 (Reuters) - Private credit funds have marked down more than a tenth of their loans by at least ‌50%, new data from MSCI showed, as corporate borrowers in ⁠this $3.5 trillion market struggle with growing debt burdens.

MSCI said in a report released on Tuesday ‌that a loan valuation of ‌less than 50% was "a level typically associated with deep distress or risk of restructuring," citing a sustained period of relatively high interest rates ​as one reason borrowers were struggling.

In recent days, big players in private debt including Carlyle, Blackstone and BlackRock have cut the value of ⁠their credit funds and regulators have warned about systemic risks arising from major banks lending to these ​asset managers.

Some of the main findings from the MSCI report.

• MSCI's data showed that private credit funds' loan writedowns ​were at the highest level since the ‌aftermath of the COVID-19 pandemic.

• Smaller private debt funds were experiencing the most borrower distress, MSCI found, with 13% ⁠of their loans now valued below 50 cents on the dollar.

• MSCI's writedown data was collected in the third quarter of 2025, the most recent available from ⁠private credit funds that often report performance with a long lag.

• Delayed reporting by private debt ​funds had contributed to the trend of investors cashing out of stock market-traded credit vehicles known as business development corporations (BDCs), MSCI said.

• Private debt funds' returns slumped to ‌1.8% in the fourth quarter of 2025 from 3.7% six months earlier according to MSCI's calculation method that separates ‌investment performance from the money funds receive from investors or pay out.

• In ⁠a survey accompanying this report, ‌MSCI found that a ​third of investors said they lacked access to private market data that they fully trusted.

(Reporting by Naomi Rovnick; Editing by ‌Keith Weir)

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