Private Credit Fears Deepen With UBS Warning of 15% Defaults

A few weeks ago, analysts at UBS Group AGlaid out a worst-case scenario for defaults in the private credit sector. Their outlook just became more grim.

Strategists including Matthew Mishsay private credit could see default rates surge as high as 15%, two percentage points more than the firm forecast less than a month ago, if artificial intelligence triggers an “aggressive” disruption among corporate borrowers.

“What is new: a clearer catalyst — rapid, severe AI disruption,” according to the UBS strategists Tuesday.

Direct lenders that took a lead role in financing software companies in recent years now look dangerously ...