2026 Q2 State of Private Credit Benchmark Report: Heron Finance analyzes 73 of the largest private credit funds

SAN FRANCISCO, April 29, 2026 /PRNewswire/ -- Heron Finance released its State of Private Credit Benchmark Report (Q2 2026 edition). The State of Private Credit Benchmark Report provides industry professionals, media, and investors with a comprehensive analysis of risk and performance trends across 73 of the world's most established private credit funds.

To read the State of Private Credit Benchmark Report (Q2 2026 edition), visit heronfinance.com/blog/the-state-of-private-credit-benchmark-report-q2-2026

The report is based on quarterly, fund-level data, as of Q4 2025, derived from SEC filings and reporting by fund managers that represent more than $1 trillion in aggregate private credit assets under management. Metrics are presented over a two-year historical period to highlight evolving trends in borrower health, fund leverage, and return dynamics across the private credit market.

"This report tracks key risk and performance metrics across the U.S. private credit industry on a quarterly basis," said Khang Nguyen, Heron Finance's Chief Credit Officer. "The industry as a whole continues to demonstrate resilience, particularly on measures like PIK interest and non-accruals, though the gap between stronger and weaker funds is widening." Nguyen also highlighted a notable divergence within the market. "Lower middle market funds have experienced higher non-accrual rates, yet realized losses have remained low — a reflection of the lower leverage, stronger interest coverage, and tighter covenants typically seen among smaller borrowers."

Key findings from the State of Private Credit Benchmark Report (Q2 2026 edition) include:

• PIK interest remains healthy: Payment-in-kind (PIK) interest marginally increased in Q4 2025, but generally remained in line with long-term historical averages.
• Non-accrual rate remains moderate: Non-accruals marginally decreased quarter over quarter, with the highest level concentrating in smaller borrowers. On an absolute level, however, non-accrual level is not concerning because most of these loans are first-lien with low loan-to-value (LTV) ratio and that the historical realized loss rate for this asset class is approximately 1% annually over the last two decades.
• Lower interest rates provide relief: The average underlying corporate borrower's interest coverage ratio (EBITDA/interest) improved year over year due to lower interest rates and some EBITDA growth.
• Loan quality is stable: We don't see material credit risk deterioration at the industry level, especially considering the fact that at the end of the day, LTV remains healthy at about 40% and that approximately 90% of the loans are first lien loans, which historically recovered well above 50% in a default scenario.

The report benchmarks 11 core private credit metrics, including:

• PIK interest
• Non-accruals
• Credit loss (net)
• First lien loan FMV / cost
• Borrower debt / EBITDA
• Borrower interest coverage
• Average LTV
• Debt / equity
• Underperformance
• Loan yield
• Annualized quarterly total returns

Each metric is accompanied by historical trend charts to provide additional context and comparability across market segments.

To read the State of Private Credit Benchmark Report (Q2 2026 edition), visit heronfinance.com/blog/the-state-of-private-credit-benchmark-report-q2-2026

About Heron Finance

Heron Finance provides individual investors and family offices with diversified private market investment portfolios, offering exposure to 25+ funds and more than 10,000 underlying private credit, private equity, private infrastructure, and private real estate investments.

Through a fully digital investing experience, Heron Finance enables access to private markets with low minimums, monthly subscriptions with no capital calls, no multi-year lockups, favorable share class, and a single consolidated tax form.

Individual investors can invest with Heron Finance in three steps: receive a personalized portfolio recommendation, fund an investment through a standard or IRA account, and monitor returns and portfolio composition on an ongoing basis.

Learn how to invest in private markets at heronfinance.com.

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State of Private Credit Benchmark Report data sources:
All metrics are calculated as of Q4 2025 as the median quarterly fund data, based on SEC filings and fund reporting from 73 private credit funds managed by firms with greater than $1 trillion in aggregate private credit AUM. Lower MM refers to lower middle market companies, which report annual EBITDA of less than $25 million; core MM refers to core middle market companies, which report annual EBITDA greater than $25 million but less than $75 million; and upper MM refers to upper middle market companies, which report annual EBITDA greater than $75 million.

Disclosure:
Any financial forecasts or returns are for illustrative purposes only and are not guarantees of future results. Private credit investments involve risks, including credit, liquidity, and interest-rate risk. Investors may lose principal and accrued interest in the event of borrower default.

SOURCE Heron Finance