Fitch statistics show that the default rate for private credit to mid-sized U.S. companies, which it tracks, will rise to a record 9.2% in 2025, up from 8.1% in 2024. High interest rates continue to compress the cash flow of small and medium-sized enterprises, and some loans have begun to stop accruing interest. The pressure has also spread to retail private credit funds. Apollo Debt Solutions received redemption requests equivalent to about 16.8% of the fund in the second quarter, but according to the preset terms, the quarterly repurchase limit is only 5%, resulting in an outflow of about $700 million, while new funds added during the same period were only about $300 million. Reuters said that this was not a temporary "lockdown" of the fund, but it exposed the maturity mismatch of semi-liquid products: investors applied for withdrawals quarterly, but the underlying assets were unlisted loans that were difficult to sell and price quickly.
