Foreword
The ACC has launched a new Quarterly Market Update, offering investors and policymakers a regular health check tracking key risk indicators within private credit loan portfolios.
Drawing on more than 70,000 loan valuations from Houlihan Lokey and other industry datasets, the ACC Quarterly Market Update provides an evidence-based assessment of private credit loan portfolios, including valuations, borrower earnings, interest coverage, loss rates and the use of Payment-in-Kind facilities.
The ACC’s Quarterly Market Update series will continue to track key credit indicators over time, with future editions providing regular analysis of valuation trends, borrower fundamentals and other emerging themes across private credit loan portfolios.
Executive Summary
Private credit’s new health check finds more stability than stress
● Q1 2026 data drawn from the Houlihan Lokey Data Bank covering 70,000+ loan valuations continues to show a private credit market that is broadly stable, with pockets of stress that remain contained and concentrated in identifiable sectors and borrower-size cohorts.
● Loan valuations are healthy: 87% of loans tracked by Houlihan Lokey are valued near par (i.e. above 97% of the amount originally lent). The 6% of loans valued below 90% of par are heavily concentrated among smaller borrowers.
● Borrower earnings continue to grow: median revenues rose 5.4% and EBITDA (earnings before interest, tax, depreciation and amortisation — a common indicator of core earnings) rose 7.3% year-on-year in Q1 2026, which was also the 11th consecutive quarter of margin expansion.
● Defaults are falling on a trailing twelve-month basis, and historical loss rates remain low: Aksia data shows that first-lien direct lending has produced cumulative principal losses of just 0.8% over the 2013–2025 period.
● Use of Payment-in-Kind (PIK) features — which let a borrower defer cash interest — has grown, but the dollar value of PIK amendments granted to stressed borrowers has remained very low at 1.5% of loan value.
Editor's Notes
The ACC Quarterly Market Update incorporates data from the Houlihan Lokey DataBank which covers more than 70,000 loan valuations and contains hundreds of loan-level metrics and standardised fields derived from Houlihan Lokey’s recurring portfolio valuation work dating back to 2017. Data is collected at monthly, quarterly, and annual intervals over most of an investment’s holding period to provide a comprehensive time-series view of portfolio company performance, credit quality, market benchmarking, and valuation outcomes throughout a loan’s lifecycle.
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