Intelligence Feed event · Credit · 2026-09-12

    Houlihan Lokey Highlights Divergent Stress in Small-Cap Private Credit

    Question

    Houlihan Lokey Highlights Divergent Stress in Small-Cap Private Credit

    Direct answer

    Houlihan Lokey data underscores a growing bifurcation in direct lending performance. While large corporate borrowers manage interest burdens, lower-middle market entities face severe liquidity compression. Secondary loan values reflect this deterioration, with 12% of loans in the $10M-$20M EBITDA bucket pricing under 90 cents on the dollar.

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

    Cite as: Market Ontology, “Houlihan Lokey Highlights Divergent Stress in Small-Cap Private Credit”, revision 1, evidence through 2026-09-12. https://marketontology.com/market-events/2026-09-12/houlihan-lokey-highlights-divergent-stress-in-small-cap-private-credit-c632eb

    CREDIT
    Houlihan Lokey Highlights Divergent Stress in Small-Cap Private Credit
    Houlihan Lokey data underscores a growing bifurcation in direct lending performance. While large corporate borrowers manage interest burdens, lower-middle market entities face severe liquidity compression. Secondary loan values reflect this deterioration, with 12% of loans in the $10M-$20M EBITDA bucket pricing under 90 cents on the dollar.
    HLIPJT
    Impact
    78
    SEP 12
    SIG
    88%
    HLIPJT
    Houlihan Lokey Highlights Divergent Stress in Small-Cap Private Credit
    Houlihan Lokey data underscores a growing bifurcation in direct lending performance. While large corporate borrowers manage interest burdens, lower-middle market entities face severe liquidity compression. Secondary loan values reflect this deterioration, with 12% of loans in the $10M-$20M EBITDA bucket pricing under 90 cents on the dollar.
    → Prolonged high debt servicing costs disproportionately squeeze cash flows of lower-EBITDA borrowers, increasing default rates and widening secondary loan discounts.
    Impact
    Houlihan Lokey data underscores a growing bifurcation in direct lending performance. While large corporate borrowers manage interest burdens, lower-middle market entities face severe liquidity compression. Secondary loan values reflect this deterioration, with 12% of loans in the $10M-$20M EBITDA bucket pricing under 90 cents on the dollar.
    Affected
    HLIPJT
    Transmission
    Prolonged high debt servicing costs disproportionately squeeze cash flows of lower-EBITDA borrowers, increasing default rates and widening secondary loan discounts.

    How this development reaches the affected companies

    AssetExposure and channelDirectionEvidence
    HLIfinancial restructuring advisory mandate volume growthUp1-3mHoulihan Lokey reports rising private credit distress across smaller borrowers
    PJTrestructuring and liability management fee opportunitiesUp1-3mPeer restructuring boutique benefiting from private credit default cycle

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    What happened next

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