U.S. Credit Risk Gap Widens as Wall Street Holds Steady

U.S. corporate default risk has risen 54% over the past decade, while financial institutions have kept a more stable credit profile, according to Credit Benchmark’s U.S. Credit Spotlight 2026, released Oct. 22, 2026. The report describes a widening gap between Main Street businesses and Wall Street financial institutions, as economic pressures affect borrowers and financial firms differently.

The widening credit divide

Credit Benchmark based its findings on consensus credit-risk data from more than 40 global financial institutions. The report says credit risk is diverging across U.S. industries, financial institutions and private credit markets. It raises questions about how economic pressures move through the U.S. financial system.

“The U.S. credit market isn't moving in one direction, and that's what makes this cycle particularly challenging,” said Michael Crumpler, CEO of Credit Benchmark. He said corporate default risk has risen more than 50% over the past decade, while financial institutions have remained relatively stable. His comments point to a difference between the credit profile of companies and that of institutions assessing or holding financial risk.

Private credit is one area the report flags for attention. Most rated U.S. business development companies, or BDCs, have investment-grade ratings. Yet their underlying borrowers with available ratings are predominantly non-investment grade and concentrated in the single-B category. The report describes a similar disconnect between private-credit funds’ profiles and those of the borrowers whose loans they hold.

Borrowers face financing pressure

The report points to increased use of payment-in-kind, or PIK, arrangements. It says these arrangements reflect pressure on borrowers facing higher financing costs and AI-driven disruption. Michael Crumpler said the differences between funds and underlying borrowers matter when investors and lenders assess risk.

AI investment is creating uneven credit conditions, according to the report. Companies supporting AI infrastructure development are seeing improving conditions, while businesses exposed to disruption face growing pressure. The report also identifies a separate risk for hyperscalers: the large capital sums needed to expand data centers and computing capacity could increase leverage. Lenders could face exposure if demand or investment returns fall short.

Financing structures, technological disruption and policy changes may shape the next credit cycle, the report says. It considers those factors alongside rapid AI investment, trade pressures and changing bank capital requirements. The analysis does not identify a migration policy, a sovereignty transfer or a popular political movement as part of its focus; it centers on credit risk, lending and investment.

Data behind the report

Credit Benchmark, founded in 2015, describes itself as a provider of credit-risk data and analytics. It aggregates and anonymizes risk views contributed by more than 40 global financial institutions, then produces independent, obligor-level credit consensus ratings and related metrics. The company says its coverage includes more than 125,000 legal entities, most of which aren't publicly rated.

Credit Benchmark says it helps financial institutions improve credit assessment, benchmark internal risk views and identify emerging risks. It has its headquarters in London and offices in New York and Bangalore. The company makes the full U.S. Credit Spotlight 2026 report available.