Cracks in the US private credit industry are widening: Loans marked as non-accrual across the 20 largest publicly traded business development companies (BDCs) rose +0.8 percentage points in Q2 2026, to a median 2.8% of cost, the highest since 2017. BDCs are publicly traded firms that lend to small, mid-sized, and distressed US businesses, giving retail investors access to private credit markets. This increase means a growing share of private-credit borrowers have either stopped making payments or are at risk of defaulting on their loans. Furthermore, new funding commitments minus the value of investments repaid or sold across the 12 largest listed BDCs fell to -$2.5 billion in Q2 2025, the lowest in at least 2.5 years. This marks the 3rd consecutive quarter of negative net funding. Meanwhile, Fitch Ratings said last week that private credit defaults rose to an all-time high in July. Stress in the $2 trillion private credit market is intensifying.(The Kobeissi Letter)