The private credit default rate (PCDR) of Fitch Ratings in the U.S. increased to 5.8% for the trailing twelve months (TTM) through January 2026, up from 5.6% in December 2025. This marks the highest rate since its inception in August 2024.
The PCDR consists of two components: the Model-Implied Credit Opinion (MCO) default rate and the Privately Monitored Rating (PMR) default rate. In January, the MCO default rate increased from 4.5% to 4.7%, and the PMR default rate rose from 9.2% to 9.4%.
Fitch recorded 11 PCDR default events in February, nearly double the 2025 monthly average of 5.9. This approaches the peak of 13 default events recorded in November 2025.
Default activity spanned 10 sectors, two of which were broadcasting and media. Nine new unique defaulters emerged, with two repeat defaulters completing the 11 default events. Of the 11 default events, seven involved the introduction of payment-in-kind (PIK) interest in lieu of cash interest, three were related to distressed maturity extensions, and one resulted from an uncured payment default.
In the 12-month period through January, 74 unique defaulters generated 89 events. Interest payment deferrals and the introduction of PIK in lieu of cash interest drove 60% of defaults. Distressed maturity extensions accounted for 27%, and uncured payment defaults represented 6%. The remaining 8% involved bankruptcies, liquidations, and debt-for-equity swaps or out-of-court restructurings in which sponsors exited their investments.
Healthcare services providers remained the sector with the highest number of unique defaulters in the 12-month period through January 2026. Fitch’s sector outlook for healthcare services providers in 2026 is “neutral.” Positive demand growth supports a stable operating environment; however, stricter eligibility rules and redeterminations under the 2025 Medicaid Act are expected to reduce enrollment and increase the number of uninsured individuals.
Consumer products recorded eight unique defaulters, the second-highest number over the past 12 months. The sector’s default rate increased from 11.0% in December 2025 to 12.8% and more than doubled from the 6.1% recorded in January 2025. Fitch expects weak consumer conditions to limit transaction volumes in the sector, particularly for discretionary goods, as highlighted in the U.S. Consumer Products Outlook for 2026.
Technology software, the third-largest PCDR sector by number of issuers, recorded only three unique defaults in the trailing twelve months (TTM) through January 2026. The sector’s default rate declined from 7.5% in January 2025 to 1.9%. Fitch expects risks for the software and cloud services industry to emerge primarily over the medium term, according to the Software and Cloud Services Outlook for 2026. While AI could lower barriers to entry for new competitors, the mission-critical nature and high switching costs of many enterprise software products continue to protect incumbent operators.
