Private Equity Drives 80% Defaulted Debt Jump, Moody’s Says (1)

Private equity-owned companies drove an increase in defaults and continue to turn to distressed debt exchanges after credit conditions deteriorated in the wake of US tariff announcements, according to Moody’s Ratings.

In the three months through June, 21 companies defaulted on more than $27 billion of debt, the firm said in a Tuesday report. That’s up from the 15 companies that defaulted on about $15 billion of debt in the prior quarter.

Many private equity firms were caught out by interest rate hikes in 2022 after snapping up lower-rated businesses during the easy money era using floating-rate debt. Those ...