Houlihan Lokey Reports Rising Defaults in Smaller Private-Credit Borrowers
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?
Debt-service strains on floating-rate loans widen credit spreads and impair asset-backed valuations for smaller private-market borrowers.
| Question | What the evidence establishes |
|---|---|
| What was reported? | Reported factSub-$100M EBITDA private credit borrowers are posting 3% default rates by loan value. |
| What else was confirmed? | Reported factIn the $10M-$20M EBITDA segment, 12% of loans are trading below 90% of par 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 credit default rate monitor — Monitor whether sub-$100M EBITDA default rates trend above 3.5%. |
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
- · Sub-$100M EBITDA private credit borrowers are posting 3% default rates by loan value.
- · In the $10M-$20M EBITDA segment, 12% of loans are trading below 90% of par value.
- · The share of loans below 90% of par in that segment was 1% in 2023.
- · Larger borrowers remain relatively resilient compared to smaller peers.
Public research record
Research framework · page evidenceCompleted event assessment
restructuring advisory fee revenue expansion vs credit market slowdown
| Type | Claim | Scope |
|---|---|---|
| Assumption | Sub-$100M EBITDA private credit borrowers are posting 3% default rates by loan value. | 2026-09-12 |
| Interpretation | restructuring advisory fee revenue expansion vs credit market slowdown | HLI |
Countercase, invalidators, and sources
Stress remains confined to the smallest borrowers without spreading to core middle-market syndications.
- · Private credit default rate monitor — Monitor whether sub-$100M EBITDA default rates trend above 3.5%.
- HLI Flags Rising Stress Among Smaller Private-Credit Borrowers · 2026-09-11
What remains unresolved
- Base path
- Sub-$100M default rates hover near 3%, driving restructuring mandates for boutique advisers.
- Adverse path
- Secondary discounts expand to larger borrower tiers, forcing write-downs across direct lending funds.
- Supportive path
- Stress remains confined to the smallest borrowers without spreading to core middle-market syndications.
- · Private credit default rate monitor — Monitor whether sub-$100M EBITDA default rates trend above 3.5%.next month
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: Sub-$100M EBITDA companies post 3% default rates; 12% of loans in $10M-$20M segment trade below 90% of par vs 1% in 2023.