Houlihan Lokey flags rising loan distress in sub-$100M EBITDA private credit
Resolved · credit · Occurred · Assessed · 1 sources
This assessment is dated 2026-09-12. Check what remains unresolved below before relying on it.
What changed relative to expectations?
Deteriorating coverage ratios in sub-$100M EBITDA credits widen secondary market discounts and constrain direct lending refinancing liquidity for lower-middle market issuers.
| Question | What the evidence establishes |
|---|---|
| What was reported? | Reported factHoulihan Lokey reported rising private credit stress concentrated among smaller corporate borrowers. |
| What else was confirmed? | Reported factSub-$100M EBITDA companies posted default rates of 3% by loan value. |
| Does the valuation support acting? | UnknownNo stored valuation assumptions for HLI yet — this is the next research task. |
| What would change the assessment? | UnknownPrivate Debt Par Discount Metric — Secondary loan pricing disclosures in sub-$100M EBITDA portfolios. |
What would this event cost your holdings?
Apply your own hypothetical returns to current holding values. The calculator does not infer security effects from this event.
Test this event against my holdingsReported facts
- · Houlihan Lokey reported rising private credit stress concentrated among smaller corporate borrowers.
- · Sub-$100M EBITDA companies posted default rates of 3% by loan value.
- · In the $10M-$20M EBITDA bracket, 12% of loans are trading below 90% of par, compared to 1% in 2023.
- · Larger borrowers remain relatively resilient compared to smaller peers.
Public research record
Research framework · page evidenceCompleted event assessment
increased financial restructuring advisory mandate volume
| Type | Claim | Scope |
|---|---|---|
| Assumption | Houlihan Lokey reported rising private credit stress concentrated among smaller corporate borrowers. | 2026-09-12 |
| Interpretation | increased financial restructuring advisory mandate volume | HLI |
Countercase, invalidators, and sources
Default rates plateau at 3% without spreading to upper-middle market loans.
- · Private Debt Par Discount Metric — Secondary loan pricing disclosures in sub-$100M EBITDA portfolios.
- HLI Flags Rising Stress Among Smaller Private-Credit Borrowers · 2026-09-11
What remains unresolved
- Base path
- Direct lenders tighten credit standards, raising refinancing costs for sub-$50M EBITDA entities.
- Adverse path
- Rising interest burden triggers broader default contagion across lower-tier private debt funds.
- Supportive path
- Default rates plateau at 3% without spreading to upper-middle market loans.
- · Private Debt Par Discount Metric — Secondary loan pricing disclosures in sub-$100M EBITDA portfolios.this week
Evidence
- HLI Flags Rising Stress Among Smaller Private-Credit Borrowers2026-09-11
“Houlihan Lokey reports rising private credit stress concentrated among smaller borrowers, with sub-$100M EBITDA companies posting 3% default rates by loan value. The $10M-$20M EBITDA segment shows the most weakness, with 12% of loans trading below 90% of par versus 1% in 2023.”
Supports: Houlihan Lokey reports sub-$100M EBITDA companies have 3% default rates, with 12% of $10M-$20M EBITDA loans trading below 90% of par versus 1% in 2023.