Corporate Borrowers Face Rising Risk as Funds Hold 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 also finds that private-credit funds can maintain stronger credit profiles even as the borrowers behind their loans deteriorate.

Borrowers Weaken, Funds Hold Steady

Credit Benchmark’s report draws on consensus credit-risk data from more than 40 global financial institutions. It finds a widening gap between Main Street businesses and Wall Street financial institutions: corporate risk has climbed, while the financial sector remains comparatively stable.

“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. “Corporate default risk has risen more than 50% over the past decade, yet financial institutions have remained relatively stable.”

Crumpler said the report identifies a similar disconnect in private credit, with “underlying borrowers deteriorating even as the funds holding those loans maintain stronger credit profiles.” That difference matters to investors and lenders assessing risk.

Most rated U.S. business development companies, or BDCs, hold investment-grade ratings. Their underlying borrowers with available ratings, by contrast, are predominantly non-investment grade and concentrated in the single-B category. The ratings describe separate parts of the lending structure: the BDCs and the businesses borrowing through the market.

Financing Pressure and AI Exposure

The report identifies increased use of payment-in-kind, or PIK, arrangements. It says borrowers facing higher financing costs and AI-driven disruption are under pressure, prompting greater use of these arrangements.

Credit conditions linked to AI investment vary. Companies supporting AI infrastructure development are seeing improving conditions, while businesses exposed to disruption face growing pressure. The report provides no figures for either group in its base findings.

Hyperscalers face a separate credit risk. Expanding data centers and computing capacity takes large amounts of capital, and the report says those investments could raise leverage and expose lenders if demand or investment returns fall short.

Crumpler said AI investment and shifting economic conditions are creating new pressures across industries. Financing structures, technological disruption and policy changes may shape the next credit cycle, the report says, alongside rapid AI investment, trade pressures and changing bank capital requirements.

Credit Data and Institutional Exposure

Credit Benchmark says it aggregates and anonymizes risk views from more than 40 global financial institutions. It produces obligor-level credit consensus ratings and related metrics, covering more than 125,000 legal entities, most of which aren't publicly rated.

The company describes its data and analytics as tools that help financial institutions improve credit assessment, benchmark internal risk views and identify emerging risks. Its report focuses on differences in credit conditions among financial institutions, private-credit funds and the businesses borrowing from them.

Credit Benchmark began in 2015 and is headquartered in London, with offices in New York and Bangalore. The company said the full U.S. Credit Spotlight 2026 report is available from it.