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US private credit defaults hit record 9.2% in 2025, Fitch says

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Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#41

Post by marcosdumay »

reliabilityguy wrote: post #3
FrustratedMonky wrote: post #2

The US Ponzi scheme coming to an end. It works great while everything is going up. 2008 Financial Crisis was triggered by Oil prices. There were lots of problematic structural elements that were fine if nobody looked close. Oil was just the sideway hit on the building to knock it over. Just takes a nudge to collapse. And here we go again.

> 2008 Financial Crisis was triggered by Oil prices. Not by the subprime mortgages given to anyone with a pulse?

I think the GP is trying to say that oil prices where the nudge that pushed the bad loans and derivatives out of stability.

I don't remember oil getting expensive back then, but it's a long time ago.

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#43

Post by jfengel »

hnthrow0287345 wrote: post #19

People have cried wolf or been wrong about incoming crashes and bubble pops so many times that this signal -- whether it's a good signal or not -- simply won't change anything I do. I'm sure someone somewhere could make a trade off of this article and this signal is definitely for them.

"Signals" are rubbish. The market is irrational and will change its mind at random.

This is, however, one of many indicators of an overall wobbling system. It would be a good time, not make the line go up, but to look for ways to stabilize the economy as a whole.

Which is unfortunately a hard question. One could theorize that we should do different things than the thing we've been doing for the past year or so, but of course there will be many who say that we just haven't done it hard enough yet.

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#45

Post by mikkupikku »

spacecadet wrote: post #33
bargainbin wrote: post #22

Luckily debt will be solved by the power of AGI, right? Just one more data centre! One more GPU! It can nearly write a basic three tier application with only 10 critical security vulnerabilities all by itself! Definitely think we’re in for a rough year financial prospects wise, and doesn’t even feel like we recovered from the 2008 crash properly.

I mean people have been saying a crash is coming for years... Consumers recklessly purchased homes and cars at double their value, while relocating for remote work that was never long term in the eyes of their employer. Sounds like a receipt for disaster or a repeat of 2008- however, so much has changed since 2008... whatever happens, Black Swan! Hope "you" have your ducks in a row... As for AGI, lol. A box of matmul…

[flagged]

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#46

Post by ferguess_k »

blakesterz wrote: post #4

"Most of the private credit loans were floating rate and tied to the federal funds rate, which has persisted at a high level over the past three years. Fitch pointed to this as a catalyst for last year's defaults." I wanted to dismiss that and say ... but it's not really historically high. I suppose it really is not IF you look WAY back. It actually has persisted at a relatively high level if you look back to 2009, w…

The problem of the current situation is that even 5% is considered as a high interest for many people, if not most of them. Inflation already pushes up the base price, and if the interest rate keeps on 5% and above many people simply won't consume, which will further pull down the economy.

For example, we decided to keep our vehicle for another 4-5 years instead of buying a new one. The same Hyundai vehicle of the same model, but different year (2026 v.s. 2020), has gone up 8,000 CAD (10K CAD considering tax), with a much higher rate (5.99% v.s. 0%). There is no way I'm buying another car in the foreseeable future. We can definitely afford it, but we won't.

The whole world has pushed up prices of food, housing and pretty much everything higher. This is the real problem -- although I wouldn't say it is the root problem.

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#47

Post by airstrike »

rglover wrote: post #31

Misleading title* > The default rate among U.S. corporate borrowers of private credit rose to a record 9.2% in 2025 Emphasis added. Headline makes it sound like retail credit, not corporate specifically. *Edit: Not misleading, just an unfamiliar term/usage from my perspective. I'm not a finance guy so didn't know the difference and assumed others wouldn't either. Mea culpa .

FWIW when I read "private credit" I think of private issuers, not retail.

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#48

Post by bad_haircut72 »

bee_rider wrote: post #36
tartoran wrote: post #29

Earlier quoted context omitted.

That’s a tax on the poor

It would cause inflation, isn’t that sort of a tax on people who have more wealth than income? (Which includes people like retirees, so, I’m not saying this is a universally good thing).

No because assets hold their worth. Poor people have no assets

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#49

Post by hnfong »

cmiles8 wrote: post #21
mothballed wrote: post #9

Earlier quoted context omitted.

Well it only took 5 years of destroying responsible savers with every policy imaginable to make sure they get crushed by those who availed themselves of the negative real rate loan inflation machine. How many people are left remaining that were dumb enough to take that strategy and are still standing? If you were operating on a cash basis for the last 5 years you were mostly wiped out by people leveraged to the 9s on…

Interest rates on things like CDs and low-risk bonds have been decent for a while now. It’s not been painful to sit on cash reserves provided you were smart about where the cash was parked. It’s not an either/or, it’s just a question of who was participating in the boom while preparing for storms ahead vs those all in on the boom. What implodes in the period ahead are things that are massively over leveraged and can’…

It's decent only if you believe inflation = CPI

In actuality, the CPI is lower than inflation because technological advancement, automation, and economies of scale (due to globalization etc) are driving consumer prices low. In other words, if factories are still producing things like they were 20 years ago, the CPI would have been much higher, and that higher number is closer to what should have been the inflation number.

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#50

Post by Mattwmaster58 »

rglover wrote: post #31

Misleading title* > The default rate among U.S. corporate borrowers of private credit rose to a record 9.2% in 2025 Emphasis added. Headline makes it sound like retail credit, not corporate specifically. *Edit: Not misleading, just an unfamiliar term/usage from my perspective. I'm not a finance guy so didn't know the difference and assumed others wouldn't either. Mea culpa .

That's exactly where my mind went as soon as I read the title. HN rules say to "use the original title, unless it is misleading". I think the original title meets the misleading bar but I can't speak for other readers.
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