Private Credit's High Stakes Gamble on Higher Rates The private credit sector is facing a reckoning, driven by a fundamental mismatch between what investors were sold and what they're getting.
This mismatch was created by the assumption that interest rates would quickly decline after their 2022 and 2023 spikes.
Higher for longer interest rates have become the new normal, forcing lenders to distinguish between temporary flexibility and deeper credit stress in their floating rate debt portfolios.