Lower leverage points to private credit's health

Chart of the Week

Dec 19, 2025

2 MIN READ

Lower leverage points to private credit's health

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Leverage in private deals has steadily declined over the past four years. Despite recent idiosyncratic issues, other fundamentals continue to signal a healthy market.

authors

Christopher Bole

Vice President, Financial Writer

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All private deals: Senior & total leverage (Debt/EBITDA)

Source: KBRA DLD Research; averages are based on a 3-month rolling basis. Annual recurring revenue deals are excluded. As of November 30, 2025.

Private credit has faced scrutiny this year amid concerns of excesses, amplified by recent idiosyncratic credit issues and instances of alleged fraud by borrowers.
Beneath the headlines, the data tells a different story: Fundamentals remain solid, with no signs of an asset bubble or widespread credit stress.
As the chart shows, leverage in private credit deals has declined meaningfully over the past four years. Default rates remain below those in the syndicated loan market while lender protections are stronger.
As public credit spreads have tightened significantly, private credit spreads have not been immune. Yet, the relative premium offered by private credit above the syndicated loan market has increased over the past year to approximately 200 basis points.¹ This attractive premium continues to be supported by a fundamentally healthy landscape.

contributing authors

Christopher Bole

Vice President, Financial Writer

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footnotes + disclosures

1. KBRA DLD Research, as of November 30, 2025.

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