A $300 billion debt wall looms over private-equity-owned companies

what happened

Private-equity firms are rushing to negotiate loan extensions for the companies they control. WSJ reports that roughly $300 billion of debt comes due starting in 2028. Refinancing has grown more expensive as interest rates rise, and software firms are especially exposed as artificial intelligence threatens their businesses.

According to PitchBook data, about $140 billion of risky corporate loans mature in 2028 and another $160 billion in 2029. From 2023 to 2025, an average of about $60 billion came due in any two-year span. About a quarter of the loans due in those years carry junk ratings of CCC-plus or below. Bank of America expects the default rate on below-investment-grade corporate loans to double next year, to 4%.

why it matters

For markets, high rates make it hard for funds to sell companies profitably, which stretches out holding periods and intensifies refinancing pressure. If defaults exceed expectations, fund returns, already down below 10%, could fall further, hurting pensions, insurers and wealthy investors.

market impact

High-yield bonds and private credit: rising default risk pressures the segment, with software most exposed

tags

instruments