Refinancing risks are stacking up for deals inked in 2021 and 2022, investors said at the Milken Asia Summit 2026 in Singapore. Because those deals were put together at a time when base rates hovered near zero, looming maturities now threaten to force borrowers to refinance under harsher conditions. At Lord, Abbett & Co., Steve Kuppenheimer serves as partner and head of private investments, and he noted that aging loans approaching maturity are exhibiting more stress and a greater likelihood of default. "I do think that we're in a little bit of an elevated default cycle right now," he said, with current defaults hovering around 3%-4% compared with a historic average of 2%.
The $1.8 trillion private credit universe has been feeling the tension. Particularly in the US, funds have been under the microscope since the start of the year. Some have logged outflows as questions mount over loan quality and whether portfolios are too tilted toward software names vulnerable to rapid advances in artificial intelligence.
Recent stumbles have not helped sentiment. Earlier this year, UK non bank finance firm Market Financial Solutions Ltd. collapsed, leaving banks staring at possible losses while accusations of financial irregularities swirled. That incident followed a pair of defaults in the latter half of 2025 - one at US auto-parts maker First Brands Group and another at Tricolor Holdings, a subprime lender - reviving concerns about underwriting discipline and risk oversight across the asset class.
A maturity wall is a known date when a lot of debt has to be refinanced. Market Briefs covers private credit free every weekday.
Even with the bumps, lenders still like the space. Higher base rates are lifting potential returns, and the shakier backdrop is pushing managers toward tighter underwriting, tougher covenants and more deliberate portfolio construction, panelists said.
According to Brigitte Posch - partner and co-head of Asia Pacific Credit and Hybrid at Apollo Global Management - some sectors face greater refinancing vulnerability given higher rates and asset values that have fallen relative to debt. She added that over the past 12 months Apollo has provided roughly $8 billion in financing across Asia Pacific and expects funding requirements to run into the trillions of dollars over the next decade, propelled by themes like AI and digital transformation. Posch said there are still attractive deals to be found, but funds must be selective and ensure they are being compensated for the risks.
Bridgepoint Credit's managing partner, Andrew Konopelski, flagged a challenge around timing. In some cases, full repayment depends on selling the underlying asset, and lenders have little say over the timing of a private equity sponsor's exit. "The question is, how do you get your money back?" he said, citing the trillions of dollars in unsold private equity holdings still waiting for buyers.
Regulators are circling too. On Thursday, Australia's corporate regulator imposed a temporary halt on offering three additional private credit products to investors, as part of a broader push to address risks in unlisted markets. For everyday investors, the picture is a mix of richer yields and a clearer view of where stress is building. Watch the refinancing clock, the quality of collateral and how quickly private equity can turn paper value into cash.
Whether borrowers can roll it is the question that decides the cycle. Join Market Briefs free and watch the calendar.
