Private credit loan portfolios show stability and resilience, with markdowns from software-related stress contained, according to research by the Alternative Credit Council (ACC).
In the ACC’s private credit quarterly market update, it found that historical loss rates remain low, with Aksia data cited in the paper showing that first-lien direct lending generated cumulative principal losses of 0.8 per cent over the 2013–2025 period.
Following jitters over software and the impact of artificial intelligence on the sector, the report found that markdowns in the sector have been contained: around 90 per cent were under 2.5 per cent of par and only 1.9 per cent exceeded five per cent.
The ACC concluded that signs of stress are largely contained in specific sectors and borrower-size cohorts, rather than spread across the private credit market.
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Median borrower revenues rose 5.4 per cent year-on-year, while median EBITDA increased 7.3 per cent, marking an eleventh consecutive quarter of margin expansion.
Overall, the ACC’s research drew on 70,000 loan valuations from Houlihan Lokey and other industry datasets.
“Private credit is a vital source of finance for businesses and an integral component of investor portfolios,” said Jiří Król, global head of the ACC.
Read more: Private credit weathers scrutiny as managers reject crisis narrative
Overall, the stable outlook identified by the ACC within private credit comes amid intense scrutiny of the asset class over the past year, amid worries over its exposure to software and high-profile collapses such as First Brands, which have provoked credit quality concerns and worries among US retail investors.
The report did find that the availability and use of payment-in-kind features has increased but it represents a modest share of capital at risk.
Read more: Private credit growth not ‘derailed’ despite volatility and liquidity risks
