Do you need financing for your equipment or inventory but aren’t familiar with trends in private lending? To help you better understand the situation, we’ve analyzed an article from Les Echos for you.
The private credit market is facing significant uncertainty. After several years of strong growth, these loans—originated by investment funds—are now facing risks. Indeed, following several incidents involving private debt, major players are limiting buybacks and writing down their portfolios, reigniting fears of a “subprime”-style crisis, while the risks remain difficult to assess.
Since 2008, the private lending market has been booming, and due to low interest rates and strong investor activity, debt has skyrocketed. Today, this market competes with banks and is largely unregulated, operating with a degree of opacity that raises questions about a potential crisis—either currently unfolding or on the horizon.
First, there have recently been several bankruptcies among borrowing companies, which has caused uncertainty among investors and, as a result, numerous withdrawal requests.
For their part, funds have restricted early redemptions for investors.
Then, valuations fell, further fueling concerns about a broader crisis, the extent of which cannot yet be measured.
This crisis is unfolding particularly for software companies, as they are more heavily indebted and therefore more exposed to private credit. This can be attributed to several factors: the impact of AI on default scenarios and loan write-downs, as well as fraud involving high-risk loans and geopolitical uncertainty.
Banks are increasingly tied to private credit financing and are therefore more exposed than before. Regulators are concerned because this trend is spreading to insurers as well.
Furthermore, individuals, who also have access to private credit, may panic and rush to make mass withdrawals, selling assets under unfavorable conditions and creating even more strain.
For now, these concerns about private debt are concentrated mainly in the United States, as the market there is more developed—it is three times larger than in Europe—and is accessible to individual investors.
Europe is currently better protected but must remain vigilant. According to a Goldman Sachs study, approximately 150 companies financed by private debt—representing $38 billion in financial obligations—have come under the control of their creditors. This represents a 2% default rate.
The Banque de France aims to strike a balance between innovation and financial stability.
It proposes not regulating private credit in the same way as banks, but rather ensuring greater transparency. With this in mind, an initial stress test was launched in October 2025 jointly by the Banque de France, the Prudential Supervision and Resolution Authority (ACPR), and the Financial Markets Authority (AMF).
Thank you for reading; we hope this helps you with your investments. To learn more about asset financing, please contact us.
