Private credit quality continues to decline as downgrades hit new highs this month
Morningstar DBRS reports that private credit downgrades reached a new peak this month. The outlook for 2026 remains negative due to rising debt and defaults.
Insights:
Morningstar DBRS has reported a measurable deterioration in private credit quality within the US 
US, noting that the proportion of downgrades reached a new high in February. According to the firm's latest market-driven analysis, downgrades outpaced upgrades by a ratio of 3.3-to-1, while default rates climbed to 4%, a significant increase from the 3.2% recorded one year earlier. This trend highlights growing credit and liquidity risks for private credit lenders at a time when market volumes are expanding despite limited public disclosure.
US, noting that the proportion of downgrades reached a new high in February. According to the firm's latest market-driven analysis, downgrades outpaced upgrades by a ratio of 3.3-to-1, while default rates climbed to 4%, a significant increase from the 3.2% recorded one year earlier. This trend highlights growing credit and liquidity risks for private credit lenders at a time when market volumes are expanding despite limited public disclosure.
