A comprehensive briefing on global macro themes, the latest two weeks of news, risk and opportunity assessment, India's private credit market with a cross-border focus, and major transactions in February 2026.
Structural forces shaping the private credit landscape as of February 23, 2026
Estimated trajectory 2020–2026E
Current levels (%)
Key developments in global private credit from February 9–23, 2026
Fitch Ratings reported the US Private Credit Default Rate (PCDR) rose to 5.8% for the trailing twelve months ending January 2026, up from 5.6% in December. This is the highest level since Fitch began tracking in August 2024. Fitch recorded 11 default events in January — nearly double the 5.9 monthly average from 2025. Of these, 7 involved PIK interest substitution, 3 were stressed maturity extensions, and 1 was an uncured payment default. Healthcare (7.8% default rate) and Consumer Products (12.8%) are the most stressed sectors.
S&P Dow Jones Indices and Lincoln International unveiled the S&P Lincoln Senior Debt Indices for the US and European private loan markets — a landmark development for an asset class long criticised for opacity. The indices will provide standardised benchmarks for private credit performance measurement, potentially accelerating institutional adoption and LP due diligence.
Fortune/Lincoln International analysis reveals that while headline default rates appear manageable, the 'shadow default' rate — capturing PIK substitutions, maturity extensions, and covenant waivers — is rising materially. PIK income as a share of BDC portfolios rose from ~4.2% pre-pandemic to ~8.8% in Q3 2025. Analysts warn that PIK is masking true credit deterioration in leveraged buyout portfolios.
Blue Owl Capital announced it would restrict investor withdrawals from its OBDC II retail-focused BDC and sell $1.4 billion in direct lending assets across three BDCs at ~99.7% of par. The announcement triggered a 10%+ drop in Blue Owl shares and contagion across Blackstone (-5.98%), Ares (-6.54%), Apollo (-5.12%), and KKR. Activist fund Saba Capital launched a tender offer for Blue Owl fund shares, calling it a 'liquidity solution' for retail investors. The episode centred on AI software company loans that have underperformed as the sector faces disruption.
Bank of America announced via internal memo that it is committing $25 billion of its own balance sheet to private credit deals, joining Goldman Sachs, JPMorgan, and Citigroup in direct private credit participation. This marks a significant shift from banks acting purely as arrangers to becoming direct balance-sheet lenders in private credit.
PGIM announced the final close of PSLO II at over $4.2 billion in available capital commitments, making it one of the largest middle market direct lending fundraises of the year. The fund focuses on US middle market companies with EBITDA of $25–150 million.
Morgan Stanley Investment Management closed a revolving and rated private securitization backed by consumer loans — a notable example of the asset-backed finance trend moving into private credit. The rated structure allows institutional investors with rating constraints to access private credit returns.
Ares Management led a private credit financing of approximately €1.4 billion ($1.7 billion) for EG A/S, a Scandinavian enterprise software business. The deal is one of the largest European direct lending transactions of 2026 and demonstrates continued appetite for large-cap European private credit despite AI software sector concerns in the US.
Janus Henderson affiliates Privacore Capital and Victory Park Capital launched the first interval fund focused exclusively on private asset-backed credit. The fund targets retail and wealth channel investors and covers consumer loans, equipment finance, and specialty finance.
Coller Capital announced the closing of a continuation vehicle for Ares U.S. Direct Lending's 2018-vintage fund with more than $1.3 billion in assets. This is a significant example of private credit secondaries — a growing market that provides liquidity to LPs while allowing GPs to retain high-quality assets.
Apollo Global Management and Schroders announced a strategic partnership to develop and distribute private credit and private equity funds to wealth management and pension clients globally. The deal reflects the accelerating democratization of private markets through the wealth channel.
An independent assessment of where capital is at risk and where returns are most compelling
Current risk intensity (0–100)
The US PCDR hit 5.8% in January 2026 — the highest since tracking began. More concerning is the composition: 60% of default events involve PIK substitution or maturity extensions, not outright payment defaults. This 'shadow default' phenomenon masks true credit deterioration. Consumer Products (12.8% default rate) and Healthcare (7.8%) are acutely stressed.
The Blue Owl OBDC II episode is a warning shot. Semi-liquid BDCs and evergreen funds marketed to retail investors promise quarterly redemptions but hold illiquid loans. When AI software company valuations deteriorated, redemption requests exceeded the fund's ability to pay — forcing a gate and asset sale. As the wealth channel grows, this structural mismatch will be tested repeatedly.
Private credit assets are held to maturity and not traded, creating limited price discovery. The IMF has warned that valuation uncertainty incentivises managers to delay loss recognition. The launch of the S&P Lincoln Senior Debt Indices (Feb 23, 2026) is a positive step, but full mark-to-market transparency remains years away.
As capital has flooded the market and competition for deals has intensified, covenants have weakened significantly. Borrower-friendly terms — including aggressive EBITDA add-backs, unrestricted subsidiary baskets, and liability management provisions — are increasingly common. In a downturn, lenders with weak documentation will have limited ability to protect their positions.
A significant portion of US private credit portfolios is concentrated in software and technology companies underwritten on pre-AI disruption assumptions. As AI lowers barriers to entry and compresses margins for legacy software businesses, credit quality is deteriorating. The Blue Owl episode is the first visible manifestation of this risk.
The BoE launched a private markets system-wide exploratory scenario (SWES) exercise in December 2025. The SEC and ESMA are increasing reporting requirements. In India, SEBI and RBI are actively reshaping the AIF and ECB frameworks. Regulatory risk is rising but unlikely to be disruptive in the near term.
A deep-dive into India's private credit market with a focus on cross-border transactions and regulatory developments
Half-year investment volumes
By deal value
| Manager | Focus | Structure | Status |
|---|---|---|---|
| Ares Management | Direct Lending, RE Credit | Offshore + GIFT City | Active |
| Blackstone Credit | RE, Corporate Credit | Offshore AIF | Active |
| Apollo Global | Distressed, Special Sits | Offshore AIF | Active |
| Ascertis Credit | Performing Credit | Singapore Offshore | Active |
| Varde Partners | Special Situations | Mauritius | Active |
| Keppel Private Credit | Infrastructure | Singapore + AIIB | Active |
| Cerberus Capital | Distressed | Offshore | Selective |
Significant private credit deals, fund closes, and market events from the past month
| Date | Borrower / Entity | Lender / Manager | Size | Type | Geography | Significance |
|---|---|---|---|---|---|---|
| Feb 19, 2026 | Internal Balance Sheet Commitment | Bank of America | $25 billion | commitment | US | BofA commits $25bn own balance sheet to private credit — largest bank direct commitment |
| Feb 19–23, 2026 | OBDC II / Three BDCs (asset sale) | Blue Owl Capital (seller) | $1.4 billion | stress | US | Blue Owl sells $1.4bn assets at 99.7% par; gates OBDC II retail BDC — sector stress event |
| Feb 18, 2026 | PGIM PSLO II (Fund Close) | PGIM | $4.2 billion | fund | US | One of the largest US middle market direct lending fund closes of 2026 |
| Feb 17, 2026 | Consumer Loan Portfolio | Morgan Stanley IM | Undisclosed | abf | US | First rated revolving private securitization of consumer loans — ABF innovation |
| Feb 13, 2026 | EG A/S (Scandinavian enterprise software) | Ares Management (lead) | €1.4bn (~$1.7bn) | deal | Europe | Largest European direct lending deal of early 2026 |
| Feb 11, 2026 | Ares 2018-vintage DL Fund (LPs) | Coller Capital (lead buyer) | $1.3 billion | secondary | US | Landmark private credit secondaries transaction |
| Feb 11, 2026 | Blackstone CLO (private credit loans) | Blackstone (issuer) | ~$1 billion | deal | US | Blackstone prices ~$1bn private credit CLO at tight levels — strong demand signal |
| Feb 11, 2026 | Keppel Private Credit Fund III | AIIB (follow-on investor) | Undisclosed | fund | Asia-Pacific | AIIB multilateral backing for Asia-Pacific infrastructure private credit |
| Feb 9, 2026 | Apollo–Schroders Partnership | Apollo + Schroders | Strategic Partnership | partnership | Global | Apollo and Schroders partner to distribute private credit to wealth/pension clients globally |
| Feb 3, 2026 | Nuveen Churchill DL Portfolio | Nuveen Churchill | $299.7 million | deal | US | Nuveen Churchill refinances $299.7m debt securitization |
| Feb 24, 2026 | Sagepoint Energy (Landfill RNG) | Power Sustainable Infrastructure Credit | Undisclosed | deal | North America | Infrastructure private credit for renewable natural gas — energy transition theme |
| Feb 15, 2026 | Jadwa GCC Diversified Private Credit Fund | Jadwa Investment (Saudi Arabia) | SAR 750m (~$200m) | fund | GCC / Middle East | First GCC-focused private credit blind-pool fund — Middle East market development |
| Feb 20, 2026 | European Direct Lending Portfolio | Ares Management | €300m+ | deal | Europe | Ares prices second European DL CLO in under a year — European market deepening |
Ready-to-post daily update for February 23, 2026
🔍 PRIVATE CREDIT DAILY BRIEF | February 23, 2026 The private credit market is navigating a pivotal moment. Here's what you need to know today: ⚡ THE HEADLINE: Blue Owl Capital gated its OBDC II retail BDC and sold $1.4bn in loans at 99.7% of par last week, triggering a 10%+ sell-off in Blue Owl shares and contagion across Blackstone (-6%), Ares (-6.5%), and Apollo (-5%). The episode exposed the structural mismatch between quarterly redemption promises and illiquid loan portfolios — a risk that has been building as private credit democratizes to retail investors. 📊 THE DATA: Fitch reports the US Private Credit Default Rate hit 5.8% (Jan 2026) — the highest since tracking began. 60% of defaults involve PIK substitution or maturity extensions, not outright payment defaults. Consumer Products (12.8%) and Healthcare (7.8%) are the most stressed sectors. 🏦 THE COUNTER-SIGNAL: Bank of America committed $25 billion of its own balance sheet to private credit deals (Feb 19). Meanwhile, PGIM closed a $4.2bn middle market direct lending fund, and Ares led a €1.4bn deal for Scandinavian software firm EG A/S. The market is stressed but not broken. 🇮🇳 INDIA SPOTLIGHT: India's private credit market hit $12.4bn in CY2025 (+35% YoY). This week: Kotak Alts raised ₹3,900 crore ($430m) in India's largest domestic private credit fund first close; Avendus triggered its greenshoe on ASCF III at ₹2,200 crore+. The RBI's ECB regime overhaul (Feb 16) dramatically expands cross-border lending access. India is the most compelling private credit opportunity in Asia right now. 📌 MY TAKE: The Blue Owl episode is a retail liquidity problem, not a systemic credit crisis. The underlying loans were sold at 99.7% of par. The real risk is in the PIK shadow defaults accumulating in US software company portfolios — not in India or infrastructure credit. For cross-border investors, India's structural growth story remains intact. #PrivateCredit #DirectLending #India #AlternativeInvestments #CreditMarkets #InvestmentBanking