Morgan Stanley Sees Private Credit Default Rates Reaching 8%

Default rates in direct lending will climb to 8% as advances in artificial intelligence continually disrupt the software industry, according to Morgan Stanley.

While AI disruption has yet to impact private credit fundamentals in a “material way,” elevated leverage and looming maturity walls within the software sector may push default rates near peak levels unseen since the pandemic, a team of analysts including Joyce Jiang said in a Monday note.