Private-credit defaults hit a record 6% — and most of it is hiding in payment-in-kind. The Big Three split their stewardship for the 2026 proxy season. And the Fed reshuffles its risk ranking, with private credit jumping from 9th to 4th. The Risk Radar edition. Full brief: https://universal-asset-owners.ghost.io
Transcript
This is the Universal Asset Owners daily video brief for Friday, May twenty-second. Three things for the people who allocate long-horizon capital — the Risk Radar edition.
Private credit first. Fitch put the US default rate at six percent for the twelve months to the end of April — a record. But the tell isn't the rate. More than half of those defaults ran through payment-in-kind and deferred interest, where a borrower pays in more debt rather than cash. That's a market deferring its reckoning, not marking it.
Second: the great unbundling of stewardship. BlackRock, State Street and Vanguard have each pulled their stewardship teams apart for this proxy season. The proxy adviser I-S-S is now judging climate proposals case by case. For an asset owner, the arrangement you relied on — delegate the index book, let the manager vote — is being deliberately decentralised.
Third: the official sector reshuffled its own list of fears. In the Fed's May survey, geopolitical risk took the top spot, A-I climbed to third, and private credit jumped to fourth from ninth. The risks moving up the list are exactly the ones a diversified, long-horizon owner cannot trade around.
Here's the chart. Three risks, ranked by how often market participants cited them, six months apart. Geopolitics moved to first. A-I, fifth to third. And private credit, ninth all the way to fourth — the steepest climb on the board.
The take. A six percent default rate is survivable. A six percent rate where most of the stress is being capitalised into the loan balance, instead of recognised as a loss, is a market postponing a reckoning. The universal owner's edge here is patience — but only if it can see what it owns.
The full brief, the chart, and The Allocator Briefing podcast are at universalassetowners dot com. Back tomorrow.
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