Intelligence Feed event · Credit · 2026-09-12

    Houlihan Lokey flags 3% default rate and rising stress in small private credit

    Question

    Houlihan Lokey flags 3% default rate and rising stress in small private credit

    Direct answer

    A Houlihan Lokey report indicates widening bifurcation across private credit markets, with distress concentrated in smaller corporate borrowers. Sub-$100 million EBITDA firms posted a 3% default rate by loan value, with 12% of loans in the $10M-$20M EBITDA bracket marked below 90% of par compared to 1% in 2023.

    Original publisher
    Market Ontology
    Evidence through
    2026-09-12
    Published
    2026-10-20
    Revision
    1 · 2026-10-20

    Cite as: Market Ontology, “Houlihan Lokey flags 3% default rate and rising stress in small private credit”, revision 1, evidence through 2026-09-12. https://marketontology.com/market-events/2026-09-12/houlihan-lokey-flags-3-default-rate-and-rising-stress-in-small-private-credit-0d0ddc

    CREDIT
    Houlihan Lokey flags 3% default rate and rising stress in small private credit
    A Houlihan Lokey report indicates widening bifurcation across private credit markets, with distress concentrated in smaller corporate borrowers. Sub-$100 million EBITDA firms posted a 3% default rate by loan value, with 12% of loans in the $10M-$20M EBITDA bracket marked below 90% of par compared to 1% in 2023.
    HLI
    Impact
    73
    SEP 12
    SIG
    85%
    HLI
    Houlihan Lokey flags 3% default rate and rising stress in small private credit
    A Houlihan Lokey report indicates widening bifurcation across private credit markets, with distress concentrated in smaller corporate borrowers. Sub-$100 million EBITDA firms posted a 3% default rate by loan value, with 12% of loans in the $10M-$20M EBITDA bracket marked below 90% of par compared to 1% in 2023.
    → Sub-par secondary loan trading and rising 3% default rates in lower-middle market private credit widen non-bank lending risk premia, tightening credit conditions for smaller corporate borrowers.
    Impact
    A Houlihan Lokey report indicates widening bifurcation across private credit markets, with distress concentrated in smaller corporate borrowers. Sub-$100 million EBITDA firms posted a 3% default rate by loan value, with 12% of loans in the $10M-$20M EBITDA bracket marked below 90% of par compared to 1% in 2023.
    Affected
    HLI
    Transmission
    Sub-par secondary loan trading and rising 3% default rates in lower-middle market private credit widen non-bank lending risk premia, tightening credit conditions for smaller corporate borrowers.

    How this development reaches the affected companies

    AssetExposure and channelDirectionEvidence
    HLIfinancial advisory restructuring demand pipelineWatch1-3mHoulihan Lokey published research tracking middle-market distressed debt volumes.

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    What happened next

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