US private credit defaults hit record 9.2% in 2025, Fitch says • Hacker News Board

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

#461

Post by whatevaa » Fri, Mar 13, 2026, 3:34 PM UTC

rootusrootus wrote: post #331

yoyohello13 wrote: post #327

Earlier quoted context omitted.

This completely discounts the work involved to find service providers you trust. I spent a long time finding a Doctor I trust, finding a Vet I trust, etc. I don't want a "free market" solution where I need to switch providers every 6 months because some rich dude is being a dick. This is the problem with so many market focused solutions. They discount the burden put on the consumer.

If the market is healthy, there will already be two or three providers in town instead of one that has any sort of monopoly, and the LBO won't be lucrative to begin with.

They buy all of them.

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

#462

Post by marcusverus » Fri, Mar 13, 2026, 3:45 PM UTC

rd wrote: post #241

chii wrote: post #228

Earlier quoted context omitted.

It's why as a retail investor, never buy things that would otherwise have not been available to you (but was to those "elite"/institutional investors previously). Think pre-IPO buy-in. Investors in the know and other well connected institutional investors get first dibs on all of the good ones. The bad ones are pawned off to retail investors. It's no different with private credit and private equity. These sorts of de…

This can't be a to-die-on rule though. Retail would've never bought GOOG, or TSLA, or AAPL if that were the case. Maybe I'm just being pedantic.

I think you're both right. Those were great opportunities, but the proportion of such opportunities which are made available to retail traders has greatly diminished over time.

There's a great chart out there somewhere (I couldn't find it) which breaks down the impact of private equity on the availability of such opportunities in public markets. It showed a dozen or so companies (like Google, Apple, Uber, Stripe, etc) and broke down their market cap gains into two parts, "pre IPO" and "post IPO" gains. Of course, the pre-IPO gains were only available to private equity (or, at best, accredited investors), whereas the post-IPO gains were available to retail traders as well.

"Older" companies like GOOG & AAPL were much more likely to have experienced that vast majority of gains after their IPOs, meaning retail investors could have made big money by betting on them early. Meanwhile newer companies (like Facebook, Uber, Stripe, etc) were much more likely to have yielded the vast majority of their gains before their IPOs, meaning retail investors didn't have the opportunity to benefit from big returns.

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

#463

Post by thijson » Fri, Mar 13, 2026, 4:08 PM UTC

pseudosavant wrote: post #329

o-o- wrote: post #247

Earlier quoted context omitted.

> Banks are lending to private equity firms to fund purchases of businesses. Yes some businesses are SaaS but here's the real problem: Many businesses' sole purpose is _leveraged buy-outs_ which really is the devil in disguise. It goes like this: A VC specialising in veterinary clinics finds a nice, privately owned town clinic with regular customers and "fair" prices, approach the owners saying "we love the clinic yo…

This is exactly what happened at a SaaS company I previously worked at. It was an awesome company with ~1500 employees, turning a small profit. Private Equity comes along, buys it with ~$2B in debt. Sticks the SaaS company with a $100M+ annual interest payment. Round after round after round of layoffs ensued. Then interest rates went up... and it got even worse. I think they are under 500 employees now. They basicall…

I saw another model where the PE buys a hospital. They sell the land under the hospital, everyone gets a cut, then they spin out the hospital. Now the hospital has to pay rent on the land it sits on.

It seems like almost every decision made is for short term gain, at the cost of long term viability.

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

#464

Post by kgwgk » Fri, Mar 13, 2026, 4:16 PM UTC

JumpCrisscross wrote: post #206

happytoexplain wrote: post #124

Earlier quoted context omitted.

I don't know a lot about finance. What is the definition/significance of "firm" in this context (if that's not a complicated question)?

> What is the definition/significance of "firm" Broadly speaking, privately-held companies are called firms. Colloquially, it tends to connote closely-held companies.

Firm is used for partnerships, where the company is not a legal entity itself. An incorporated company may be closely held but it wouldn’t be a firm in that sense. (However, it may be customary to talk about law or accouting firms, for example, regardless of their actual legal form.)

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

#465

Post by kgwgk » Fri, Mar 13, 2026, 4:18 PM UTC

lxgr wrote: post #80

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 .

Private as in private (i.e. non-public) corporation, not as in individual/retail/natural person borrowers.

That’s not what it means though. It’s done through a partnership. Or not, if we count Business Development Companies as “private credit” - but then they are not usually private corporations either.

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

#466

Post by klodolph » Fri, Mar 13, 2026, 4:53 PM UTC

georgeecollins wrote: post #459

klodolph wrote: post #402

Earlier quoted context omitted.

pocksuppet’s advice is I think more of a reaction to a specific way that you could take a short position, and in 2026 I think you want to assume that people who know what “short” means, also know what options are. The advice is good in a kind of stopped clock sense.

I'm old, so I am a stopped clock. However, I have invested my whole life including good times and bad. I believe that for a retail trader -- someone who doesn't get paid to trade other people's money-- options are bad. OK yes there are special cases like when your job requires you to hold a lot of one stock etc. I'm not going to make the case why here I am sure it has been argued to death. I do remember smart friends…

My take on why options are bad—options are bad most people because most people don’t get use from hedging, don’t have enough information about the timeline of price movements, and all you’re left with is a form of gambling. A form of gambling that’s pervasive enough to worry me. People on Reddit trying to get rich with SPY options (how could you possibly know where SPY is moving?)

Short positions are also bad, because there’s an ongoing cost to carrying a short position, and that cost is likely to cannibalize your expected gains.

Lots of good reasons around to avoid short positions and options like they’re the plague. I don’t like the “unlimited downside” reason because it’s solvable.

To people who are making lots of money in stocks or options… my question is always, “do you have high returns, or do you just have high volatility?” Because it’s easy to look at high short-term returns and believe that you’ve somehow beaten the market, when you’re really just holding a high volatility position that got lucky.

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

#467

Post by renecito » Fri, Mar 13, 2026, 5:16 PM UTC

Ok, I think I now got where all the AI money was coming from.

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

#468

Post by klodolph » Fri, Mar 13, 2026, 5:46 PM UTC

ses1984 wrote: post #452

Ntrails wrote: post #449

Earlier quoted context omitted.

> “Shorting” a company does not just mean short selling stock. Instead, it means having a short position, which you can use without unlimited downside. If you are an equity index holder anyway, simply by not holding any exposure in an otherwise "market" portfolio is a "short" relative to benchmark . ie if I "buy" the SP500 constituents according to weight but with TSLA zero'd out my portfolio is essentially the same…

Normally you buy into something like SP500 via something like an ETF, something with a very low fee because it’s managed entirely automatically via simple algorithms. How can you invest in SP500 minus TSLA without racking up exorbitant fees? Unless such a fund already exists, you’d be managing it yourself and pretty much wiping out any gains any time you rebalanced.

> How can you invest in SP500 minus TSLA without racking up exorbitant fees?

Various options…

1. Direct indexing (requires minimum amount of assets),

2. Certain actively-managed ETFs like GGRW, which is not exactly SP500 minus TSLA but it’s not too far off

3. Buying passively-managed ETFs in sectors that don’t include TSLA,

4. TSLQ, maybe. You get fees and other problems. I wouldn’t.

Direct indexing costs more than ETFs in terms of fees, but there’s apparently some kind of tax loss harvesting that you can do with direct indexing to offset the fees, and some people say you can come out ahead. I don’t understand how tax loss harvesting works at a satisfactory level (I’ve read articles and watched videos, but I think I would need to take an accounting class and really sit down with a spreadsheet before I could say that I understand how direct indexing and tax loss harvesting work together.)

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

#469

Post by pocksuppet » Fri, Mar 13, 2026, 6:00 PM UTC

klodolph wrote: post #404

iwontberude wrote: post #401

Earlier quoted context omitted.

And puts are highly manipulated by MMs so you have to really study the chain and how it behaves before you have a chance to buy the contracts at a fair price. MMs will flood the market with contracts and devalue yours even when the price is moving in your direction. I highly suggest people think twice about trading options, they are best used as hedges for large positions during particularly vulnerable periods.

I’m not convinced. If you think you know what the fair price is for a put, then you can bid that price. If you don’t think you know what the fair price is, then you shouldn’t be trading options. There are reasons for not trading options, but the main reason is “you know less about price movement than you think you do”.

Realistically, if you don't have the volume to be a market maker, there's no point bidding anything except the current market price. Either the price is higher than your bid, and your order won't fill (so why place it?) or the price is lower than your bid, and you should expect the market knows something you don't.

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

#470

Post by blueone » Fri, Mar 13, 2026, 6:23 PM UTC

georgeecollins wrote: post #459

klodolph wrote: post #402

Earlier quoted context omitted.

pocksuppet’s advice is I think more of a reaction to a specific way that you could take a short position, and in 2026 I think you want to assume that people who know what “short” means, also know what options are. The advice is good in a kind of stopped clock sense.

I'm old, so I am a stopped clock. However, I have invested my whole life including good times and bad. I believe that for a retail trader -- someone who doesn't get paid to trade other people's money-- options are bad. OK yes there are special cases like when your job requires you to hold a lot of one stock etc. I'm not going to make the case why here I am sure it has been argued to death. I do remember smart friends…

> I do remember smart friends getting interested in options at different times in the last thirty years because they make higher returns. Then they have a period where make lower returns, or have a real problem.

Volatility. Never trade options if you don’t understand volatility.