A buyout works like a house flip with a big mortgage. You borrow most of the price, fix the place up, and sell in a few years. In 2021 the loans were cheap and the plan looked easy. Then rates went up and the buyers went home. The Journal’s Matt Wirz and Mark Maurer report that private-equity firms now face a $300 billion wall of debt coming due in 2028 and 2029. Many are scrambling for extensions.
About $140 billion of risky corporate loans come due in 2028 and another $160 billion in 2029, PitchBook data show. That’s about five times normal. From 2023 to 2025 the two-year total averaged about $60 billion. The usual habit is to refinance a big loan 18 to 24 months before it’s due. Companies owned by buyout firms have struggled to do that this year. Higher rates make new loans costly. And about a quarter of the loans still due in those two years are rated CCC-plus or below. That’s near the bottom of the junk ladder.
Software is the sore spot. Buyout funds bought software companies in bulk over the past decade, and they make up about one-third of the loans due. Only 5% of software debt due in 2028 has been refinanced this year, against 42% for other industries, Carlyle’s numbers show. Add the fear that AI companies could eat these businesses’ lunch. Solera, which makes vehicle-maintenance software, has about $8 billion due. A planned 2024 IPO never got off the ground, S&P cut its loans to CCC-plus, and they trade at 93 to 77 cents on the dollar. Apollo, Fidelity and Pimco are among the holders.
Buying time
Some firms are paying to extend. Clearlake wanted to refinance $2.2 billion of loans for symplr, a healthcare software company. Lenders had marked the loans near 66 cents on the dollar and said no at first. So Clearlake, fresh off raising a $15 billion fund, put in $175 million for preferred shares. The lenders pushed the due dates to 2030 and 2031 and added a loan of roughly $100 million. Everyone bought a few more years. Bank of America says these maturity walls are the highest since 2013. It expects the junk-loan default rate to double next year to 4%. Mark Jenkins of Carlyle put it plainly. There’s “nothing in my mind that says rates are going down” any time soon.
Our read
This is Investments and Risk (IN04). PitchBook’s data put recent private-equity fund returns under 10%. They ran about 15% back when rates sat near zero. That’s before the rise in defaults that Bank of America now expects. The investors on the hook are pensions, insurers and wealthy individuals, and the pitch to individuals keeps growing. The same loans sit inside private-credit funds and some mutual funds. A fund with “private” on the label isn’t automatically safer than the stock market. It’s just priced less often. We follow this thread because it keeps showing up in the retirement products people are offered.
The one concrete thing in your plan is the alternatives sleeve, if you have one. That’s any private-equity, private-credit or interval fund in a 401(k) menu, an IRA or a brokerage account. The one check this week is to pull its last statement and find three things. What it holds, how often it’s priced, and how long until you can get your money out. If any answer takes more than a minute to find, that’s the umbrella to inspect now, while the sky is only cloudy.