DISTRESS WATCH: Private Credit Strains Grow as Rates Stay High

While tariff-induced stress has eased across most of corporate credit, warning signs continue to proliferate in one corner: direct loans to middle-market companies.

Such issuers are struggling to withstand high interest rates as expectations for Federal Reserve rate cuts are pushed further into the future, according to Fitch Ratings.

These companies “have limited ability to withstand prolonged high base rates and economic pressures due to their smaller scale and lack of diversification,” Fitch said in a May 30 report.

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Within a portfolio of private middle-market issuers ...