{"id":482,"date":"2026-05-30T12:12:11","date_gmt":"2026-05-30T12:12:11","guid":{"rendered":"https:\/\/reliablemovingcrews.com\/?p=482"},"modified":"2026-05-30T12:12:11","modified_gmt":"2026-05-30T12:12:11","slug":"unrealised-losses-at-us-private-credit-lenders-deepen","status":"publish","type":"post","link":"https:\/\/reliablemovingcrews.com\/?p=482","title":{"rendered":"Unrealised losses at US private credit lenders deepen"},"content":{"rendered":"<div>\n<div>\n<div>\n<ul>\n<li>Companies<\/li>\n<\/ul>\n<\/div>\n<div>\n<ul>\n<li><svg><\/svg>\n<div>\n<div>\n<div><button><span><span>Follow<\/span><\/span><\/button><\/div>\n<\/div>\n<\/div>\n<\/li>\n<li><svg><\/svg>\n<div>\n<div>\n<div><button><span><span>Follow<\/span><\/span><\/button><\/div>\n<\/div>\n<\/div>\n<\/li>\n<li><svg><\/svg>\n<div>\n<div>\n<div><button><span><span>Follow<\/span><\/span><\/button><\/div>\n<\/div>\n<\/div>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<div>May 29 (Reuters) &#8211; Unrealised losses at U.S. private credit lenders deepened in the first quarter to their worst level since 2022, while the amount of interest income they received in \u200bkind, rather than cash, stayed high, filings and data reviewed by Reuters showed.<\/div>\n<div>Private \u200ccredit has faced growing scrutiny as higher borrowing costs strain some middle-market companies and investors focus more closely on valuations, non-accruals and redemption requests at non-traded vehicles.<\/div>\n<div>A Reuters analysis of 51 business development companies, \u200bor BDCs, showed aggregate unrealised losses equalled 2.35% of net asset value in the \u200bfirst quarter of 2026, the steepest quarterly hit since the second quarter \u2060of 2022.<\/div>\n<div>The markdowns came as payment-in-kind, or PIK, interest income remained elevated despite easing \u200bfrom recent highs.<\/div>\n<div>PIK allows borrowers to defer cash interest by adding it to debt balances. A \u200bseparate Reuters analysis found identifiable PIK interest income totalled about $477 million in the quarter, up 2% from the previous quarter but below the early-2025 peak of about $633 million.<\/div>\n<div>Together, the figures suggest stress is showing up \u200bin two ways: elevated non-cash interest income and deeper portfolio markdowns.<\/div>\n<div>Unrealised losses are not \u200bdefaults, but they reduce reported net asset value (NAV) and can reflect weaker recovery expectations. Some markdowns may reverse, \u200cwhile \u2060others can become realised losses if borrowers default.<\/div>\n<div>Filings with the U.S. Securities and Exchange Commission show Investcorp Credit Management BDC (ICMB.O)<svg><\/svg><span>, opens new tab<\/span> recorded unrealised losses equal to 16.8% of NAV, FS KKR Capital Corp (FSK.N)<svg><\/svg><span>, opens new tab<\/span> 6.7% and Blue Owl Technology Finance (OTF.N)<svg><\/svg><span>, opens new tab<\/span> 6.5%.<\/div>\n<div>Ares Capital Corp (ARCC.O)<svg><\/svg><span>, opens new tab<\/span> reported $54 million in PIK interest \u200bincome in the first \u200bquarter, FS KKR \u2060Capital reported $38 million, and Blue Owl Capital Corp $31.5 million, the SEC filings also show.<\/div>\n<div>Fitch has warned that rising exposure to loans with deferrable \u200bor PIK options could pressure BDC liquidity if cash earnings are \u200binsufficient to \u2060cover dividend payments.<\/div>\n<div>&#8220;Private credit is entering its first real credit cycle since the GFC (Global Financial Crisis),&#8221; said Howard Mason, head of financial research at Renaissance Macro Research.<\/div>\n<div>Higher borrowing costs, weaker exit markets \u2060and \u200bAI-related pressure on software valuations are straining highly leveraged \u200b2021 deals, especially those using PIK structures to defer cash interest, Mason added in a note.<\/div>\n<\/div>\n<p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=480\">Week in Review: Hot inflation, trillion-dollar chips, and Blue Origin<\/a><\/p>\n<p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=479\">Canada\u2019s broader citizenship rules draw strong American interest, data shows<\/a><\/p>\n<p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=476\">Senate Republicans face a political knife-edge over Trump\u2019s \u2018anti-weaponization\u2019 fund<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unrealised losses at U.S. private credit lenders deepened in the first quarter to their worst level since 2022, while the amount of interest income they received in \u200bkind, rather than cash, stayed high, filings and data reviewed by Reuters showed.<\/p>\n","protected":false},"author":1,"featured_media":481,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[63],"class_list":["post-482","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-funds"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - 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