More than a tenth of private credit fund loans have been marked down by at least 50%, new data from MSCI shows, as corporate borrowers in this $3.5 trillion market grapple with escalating debt burdens. MSCI, a global provider of critical decision support tools and services for the investment community, released a report on Tuesday indicating that a loan valuation below 50% is typically associated with “deep distress or risk of restructuring.” The firm’s data and insights help investors build and manage portfolios across various asset classes.
The report attributes these struggles largely to a sustained period of relatively high interest rates. In recent days, major players in private debt, including Carlyle, Blackstone, and BlackRock, have already reduced the value of their respective credit funds. Regulatory bodies have also issued warnings concerning potential systemic risks arising from the significant lending activities of major banks to these influential asset managers.
MSCI’s findings highlight that private credit funds’ loan writedowns are now at their highest level since the immediate aftermath of the COVID-19 pandemic. Smaller private debt funds are experiencing the most acute borrower distress, with 13% of their loans currently valued below 50 cents on the dollar. This writedown data was collected in the third quarter of 2025, representing the most recent available figures, though private credit funds often report performance with a considerable lag.
This delay in reporting by private debt funds has contributed to a trend of investors withdrawing capital from stock market-traded credit vehicles, known as business development corporations (BDCs). Furthermore, private debt funds’ returns slumped to 1.8% in the fourth quarter of 2025, a notable decline from 3.7% six months earlier, according to MSCI’s calculation method. A survey accompanying the report also revealed that a third of investors surveyed lacked access to private market data they fully trusted.
