Private Credit Reality Check: What the Data and Managers Are Telling Us
Key takeaways from SOLVE and DealCatalyst’s Private Credit Reality Check, Part 2
Private credit continues to attract capital, but beneath the surface, a more complicated picture is emerging. Borrower performance is diverging, competition is shifting, and growing interest in asset-based finance (ABF) is creating both opportunities and new risks.
These themes took center stage during Private Credit Reality Check, Part 2, hosted by SOLVE in partnership with DealCatalyst. Moderated by Sourav Srimal, Chief Growth Officer at SOLVE, the discussion featured Dwayne Hyzak, CEO of Main Street Capital; Alex Knowland, Managing Director at H.I.G. WhiteHorse; Meghan Neenan, Managing Director at Fitch Ratings; and Lindsay Trapp, Partner at Kirkland & Ellis.
Credit performance is becoming increasingly polarized
Not all borrowers are experiencing the current environment equally.
The divide between companies outperforming expectations and those facing significant challenges is widening. Higher borrowing costs, inflation and economic uncertainty are weighing on deal activity, yet sectors such as infrastructure, industrials and reshoring-related businesses continue to demonstrate strength.
For lenders, understanding individual company fundamentals, sponsor quality and underlying credit exposures is becoming increasingly important as headline market performance masks significant differences across portfolios.
Banks are both competitors and partners
The relationship between banks and private credit managers continues to evolve.
After returning to direct competition in certain lending markets, banks are showing renewed interest in partnerships with private credit providers as economic uncertainty encourages a more cautious approach to risk.
At the same time, insurance capital continues to play an important role in financing increasingly complex structures.
Private credit’s growth isn’t necessarily coming at the expense of banks. Competition and collaboration are increasingly operating side by side, with financing structures adapting to changing market conditions.
ABF growth is putting underwriting discipline to the test
Asset-based finance is attracting significant capital as managers expand beyond traditional direct lending.
But rapid growth brings challenges. Increased competition and new market entrants can lead to aggressive advance rates, insufficient reserves and weaker covenant protections, creating vulnerabilities when market conditions deteriorate.
Opportunities span infrastructure, specialty finance and a broad range of underlying assets. However, understanding collateral quality, deal structures and portfolio-level exposures remains critical.
The opportunity in ABF is significant, but disciplined underwriting and structuring will determine long-term performance.
BDC data reveals where pressure is building
Beyond market commentary, BDC portfolio data offers a more granular view of emerging credit trends.
SOLVE’s analysis of second-quarter 2026 filings, covering 170+ BDCs, 10,500+ portfolio companies and 55,000+ holdings, revealed:
- 1.64% of investments on non-accrual, measured at cost
- 12.9% of investments involving payment-in-kind (PIK), measured at cost
- 5.68% of assets marked below 80% of cost
These indicators highlight why aggregate performance figures alone may not tell the full story.
Differences in valuation practices, PIK structures and underlying borrower performance make it essential to examine credit quality at the portfolio and investment level.
Taken together, these metrics can help investors distinguish isolated credit challenges from broader patterns of deterioration.
Fill out the form to watch Private Credit Reality Check, Part 2 on-demand >>
Looking ahead: A market that rewards deeper analysis
One message emerged consistently: private credit is not moving in a single direction.
As dispersion increases, the ability to look beyond headline performance and assess individual investments, portfolio valuations and emerging credit stress becomes increasingly valuable.
Through SOLVE Workstation | Private Markets, investors can explore BDC holdings, valuation movements, non-accruals and PIK trends to develop a clearer picture of private credit performance.
Fill out the form to watch Private Credit Reality Check, Part 2 on-demand >>
Looking ahead: A market that rewards deeper analysis
One message emerged consistently: private credit is not moving in a single direction.
As dispersion increases, the ability to look beyond headline performance and assess individual investments, portfolio valuations and emerging credit stress becomes increasingly valuable.
Through SOLVE Workstation | Private Markets, investors can explore BDC holdings, valuation movements, non-accruals and PIK trends to develop a clearer picture of private credit performance.
Fill out the form to watch Private Credit Reality Check, Part 2 on-demand >>
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About SOLVE
SOLVE is the leading market data platform provider for fixed-income securities, trusted by sophisticated buy-side and sell-side firms worldwide. Founded in 2011, SOLVE leverages its AI-driven technology and deep industry expertise to offer unparalleled transparency into markets, reduce risk, and save hundreds of hours across front-office workflows. With the largest real-time datasets for Securitized Products, Municipal Bonds, Corporate Bonds, Syndicated Bank Loans, Convertible Bonds, CDS, and Private Credit, SOLVE empowers clients to transform the way they bring new securities to market, trade on secondary markets, and value highly illiquid securities. Headquartered in Connecticut, with offices across the globe, SOLVE is the definitive source for market pricing in fixed-income markets.
