Business & Finance
US Private Credit Stress Masked by Growing PIK Use, Moody’s Says
Key Points
US Private Credit Stress Masked by Growing PIK Use, Moody’s Says Borrowers in the US private debt market are using delayed interest payments and maturity extensions to avoid default, potentially masking the overall extent of credit stress, according to Moody’s Ratings. The default rate among 607 private credit borrowers assessed by Moody’s stood at 4% in the 12 months to June. That figure rose to 5.8% when payment-in-kind amendments and maturity extensions among distressed issuers were taken...
US Private Credit Stress Masked by Growing PIK Use, Moody’s Says
Borrowers in the US private debt market are using delayed interest payments and maturity extensions to avoid default, potentially masking the overall extent of credit stress, according to Moody’s Ratings.
The default rate among 607 private credit borrowers assessed by Moody’s stood at 4% in the 12 months to June. That figure rose to 5.8% when payment-in-kind amendments and maturity extensions among distressed issuers were taken into account, the firm wrote in a report. The rating agency views such tools as distressed exchanges and therefore equivalent to defaults.