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Private-credit borrowers are feeling the squeeze of elevated interest rates, possibly pushing them closer to default.

Distress rates, measured by write-downs of 20% or more by GPs, have more than tripled since early 2022, and now affect about 10% of senior loans. GPs are also cutting more deeply, notably in mezzanine debt where nearly 15% of loans now face valuations marked 50% or lower, up from 8% at the start of 2022.