Private credit default rate rises to 6.3% in the 12 months through August

• The U.S. private credit default rate reached a record 6.3% in the 12 months through August, according to Fitch Ratings.
• Companies that borrow with direct lending generally rely on floating-rate debt, meaning Fed rate hikes increase their interest expense.
• So-called 'maturity extensions under stress' (pushing back loan deadlines) accounted for nearly half of all default events.
• Healthcare and Industrial/Manufacturing sectors show the highest default rates at 9.9%, while the Tech sector has the lowest at 0.6%.

The video reports on the U.S. private credit sector, where default rates have hit a record 6.3% in the 12 months through August. A Federal Reserve rate hike is expected to add further pressure, as many companies rely on floating-rate debt, increasing their interest expenses. This trend is concerning, especially given the current strong economy.