US private credit defaults reached record levels in 2025 on Fitch’s measure and stayed elevated into the second quarter of 2026. Over the same period, many of the same lenders have become a major source of funding for the AI infrastructure build-out, helping support more than $1tn of committed spending. The two developments are usually reported separately. In this paper, James Warr, Consultant at Alpha Alternatives, argues that they belong together, because the credit stress and the AI exposure sit on the same balance sheets.
Using data from Fitch, the Financial Times, PitchBook LCD, the Bank for International Settlements, Vanguard and Apollo, the paper looks at where stress is building across the largest business development companies and why the quality of AI-related private credit varies so widely. It also covers how long-dated issuance from Big Tech is changing investment-grade bond indices, and what it means that a small group of companies are now customers, suppliers, investors and borrowers to one another. It ends with practical points for credit managers and limited partners who want a clearer view of their own exposure. Download the full paper to read the analysis.
