Proskauer’s Private Credit Default Index default rate fell to 1.76% in the second quarter of 2025, from 2.42% in Q1 and from 2.71% in the equivalent year-ago period.
The firm said that the second quarterly decline in default rates is consistent with the trend in the broadly syndicated market.
Default rates among the smallest companies in the sample size rose slightly in the quarter, while defaults among the larger and middle segments of the sample fell.
Borrowers with EBITDA greater than or equal to $50 million saw default rates decrease in Q2 from 1.7% to 0.5%, while borrowers with EBITDA less than $25 million saw default rates increase from 1.4% to 1.8% over the same period.
The middle borrower segment — companies with EBITDA between $25 million and $49.9 million — saw default rates fall from 4.3% in Q1 to 2.9% in Q2.
“While there was a slight uptick in defaults among smaller companies, the overall downward trend signals effective risk management and stability across the sector,” said Stephen A. Boyko, partner in Proskauer’s private credit group.
The index tracks US senior secured and unitranche loans, including 739 loans representing $143.6 billion in original principal amount in the most recent quarter.
For comparison, as of June 30, the trailing 12-month default rates of the Morningstar LSTA US Leveraged Loan Index were as follows:
- Payment default rate by amount: 1.11%
- Payment default rate by issuer count: 1.25%
- Dual-track default rate by issuer count: 4.46%
Featured image by PM Images/Getty Images
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