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Private Credit Defaults 101: Beyond the Noise
Like any good school year, this series went by fast. But as class comes to an end, there’s one theme that’s been top of mind here at The Lead: “noise.”
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October 6, 2026 
Information technology topped nonaccruals on a cost basis
The information technology sector moved from second place in the first quarter to the top of the list in the second quarter
Top 50 BDCs Accounted for 75% of Nonaccrual Loan Cost in Q2’26
The 50 largest BDCs, on the basis of total debt investments as of the second quarter of 2026, accounted for 75% of the total aggregate reported value of nonaccrual debt at cost and fair value.
Information Technology Topped Nonaccruals on a Cost Basis
The 50 largest BDCs, on the basis of total debt investments as of the second quarter of 2026, accounted for 75% of the total aggregate reported value of nonaccrual debt at cost and fair value.
European mid-market direct lending margins face steady compression since 2024
European mid-market direct lending margins have seen consistent compression over recent years but recorded a slight increase in the second quarter of 2026…
Q2'26 BDC analysis shows additional 184 bps of nonaccruals at cost
In a universe of 173 business development companies, or BDCs, Octus identified a total of $9.5 billion of debt (at cost) in nonaccrual status reported in the second quarter of 2026, a slight decline of 5% from $10 billion in the first quarter of 2026.
Software, consumer-related direct lending deals fell in H1'26
The software and technology sector, the second-most-active sector in 2025 at 17% of total deal activity, slid to fifth place in the first half of 2026.
Spread premium tightened slightly in Q2'26
One bright spot for lenders in Q2 was that average spreads edged higher for the second straight quarter.
LMM credits earned a 46.5 bps spread premium in Q2'26
Lower middle-market lenders held their risk/return edge over larger deals in the second quarter.
US Direct Lending Spread Per Turn of Leverage Widens
Wider spreads and slightly lower leverage provided lenders with better risk-adjusted pricing across all deal sizes in the second quarter.
Q2 European direct lending activity up 9%
Despite the geopolitical and macroeconomic events of the first half of the year creating a volatile environment, the European private credit market continues to demonstrate robust resilience.
46% of traded BDCs had over 5% non-accrual exposure in Q1'26
46% of Traded BDCs Had Over 5% of Nonaccrual Exposure (at Cost Value) in Q1’26, up From 31% in Q4’25
Q1'26: Non-Accrual Issuers Due Through 2028 Up 4%
The number of issuers with nonaccruals maturing through 2028 increased by 4% in Q1’26
