Private Credit Tracker 1Q26 – Softening Fundamentals & Growing Dispersion

Research evidence excerpt

Private Credit Tracker 1Q26 – Softening Fundamentals & Growing Dispersion

June 18, 2026 11:30 AM GMT

M O R G A N S T A N L E Y R E S E A R C H

North America Private Credit Tracker 1Q26 – Softening Fundamentals &

Growing Dispersion Morgan Stanley & Co. LLC

Joyce Jiang

• A new wave of redemption has rolled in, but liquidity concerns remained manageable. We estimate $12bn of requests in Strategist

2Q26, bringing YTD requests to $32bn. In many cases, requests have exceeded the levels seen in 1Q. Despite higher withdrawal Joyce.Jiang@morganstanley.com

activity, BDC equity stabilized and bond spreads retraced much of the March widening. Investor sentiment picked up as BDCs +1 212.761.0165

were able to tap the public credit market to raise funds, albeit at a higher cost. BDCs continue to have multiple liquidity levers to Vishwanath Tirupattur

pull, suggesting that liquidity stress remains far from becoming a solvency concern. Strategist

Vishwanath.Tirupattur@morganstanley.com

• Private credit fundamentals softened in 1Q26, though broad deterioration remained limited. In our sample of BDC filings in +1 212.761.1043

1Q26, headline nonaccrual rates inched higher and PIK income remained elevated, with a growing share of BDCs reporting high

PIK concentrations. Outside BDCs, leverage was broadly stable, interest coverage improved, and rating actions remained Gabriel Reyes Esclasans

balanced in 1Q26. While software fundamentals have held up thus far, near-term refinancing pressure is mounting. Higher Strategist

leverage, weak coverage, and high PIKs leave the sector vulnerable to future stress. Gabriel.Reyes.Esclasans@morganstanley.com+1 212 761-4134

• Dispersion within BDCs remains elevated, reflecting difference in BDC vintage.