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WSJ Heard on the Street
Private Credit's First Real Stress Test
After a decade of growth, the asset class is finally facing default rates that look like the loan market it replaced.
Jonathan Weil · WSJ Heard on the Street · April 23, 2026
The cycle finally arrives
Weil's column reports that private credit default rates have moved into the mid-single digits for the first time since the asset class scaled, and that several of the largest BDCs are reporting non-accruals at levels that approximate the syndicated loan market they were sold as a safer alternative to.
What we are doing
We have not had material client exposure to private credit BDCs — the yield premium did not, in our judgment, compensate for the illiquidity and the mark-to-model risk. We are not changing that view. For clients who hold BDC positions through other advisors, we recommend a quarterly conversation about realized vs. accrued yield.
Bottom line: private credit will be a 2026-2027 story. We continue to prefer public credit and dividend-paying equity.
What This Means For Your Book
We do not own BDCs. Reinforce avoid — the yield premium has not been compensating for the cycle risk.
Liquidity is a real return. Mark-to-model is not the same as marked.
Want to talk through how this affects your plan?
15-minute Q1 review — no pressure, just an update on positioning.
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