Direct lending interest coverage and leverage levels point to sound fundamentals despite challenged sentiment this year.
authors
Christopher Bole
Christopher Bole
Vice President, Financial Writer
Charts show interest coverage by issuer size (left) and senior and total leverage across private deals (right).
Source: KBRA DLD as of April 30, 2026, latest available data. Based on direct lending deals.
  • Though private credit sentiment has been challenged this year, credit fundamentals continue to improve.
  • Interest coverage ratios (left-hand chart) improved in 1Q26, indicating borrowers continue to generate sufficient cash flow to service debt despite elevated base rates.1
  • At the same time, leverage (right-hand chart) has remained rangebound, suggesting underwriting discipline has not materially loosened.1
  • Together, stable leverage and improving coverage point to a borrower base that appears fundamentally resilient within an uncertain macro environment.
  • Private credit may also benefit from stronger lender protections than public markets should conditions deteriorate.
contributing authors
Christopher Bole
Christopher Bole
Vice President, Financial Writer
footnotes + disclosures
  1. KBRA DLD as of April 2026, latest data available.

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