A business can be worth more than a lender can actually realise. As delayed exits, refinancing constraints and redemption pressures stretch repayment timelines, they are testing a central assumption of private credit: that capital can stay invested until borrowers repay and value is turned into cash.

As borrower stress becomes harder to distinguish from temporary liquidity pressure, amendments, PIK and maturity extensions can delay the moment trouble reaches reported default figures. The question for private credit investors is whether their portfolios are generating sustainable returns or simply postponing the recognition of credit deterioration.