International law firm Proskauer revealed the results of its Q3 2024 Private Credit Default Index, with an overall default rate of 1.95%.
As mentioned in the latest update from Proskauer, the Q3 default rate is a decrease from 2.71% in the prior quarter.
However, Proskauer also mentioned that the overall default rate is still higher than the “default rate for Q1, which was 1.84%.”
Proskauer’s Q3 Default Index includes “872 loans representing $152.1 billion in original principal amount.”
The index tracks senior-secured and unitranche loans in the United States and breaks the default rate down “both by EBITDA (less than $25 million in EBITDA, $25 million to $49.9 million in EBITDA and at least $50 million in EBITDA) and industry (health care/life sciences, software & technology, manufacturing, consumer goods and services/retail and business services).”
For companies with EBITDA of less than “$25 million, defaults decreased from 2.6% in Q2 to 2.0% in Q3, a similar rate to what was observed at the end of Q1 (1.9%).”
For companies in the “$25 million to $49.9 million EBITDA band, default rates slightly rose from 2.7% in Q2 to 3.0% in Q3.”
For the largest companies, those with “at least $50 million in EBITDA, defaults decreased by two percent from the previous quarter – from 2.8% in Q2 to 0.8% in Q3.”
This quarter, all industries experienced a decline in default rates, “although rates mostly remained higher than where they were in Q1.”
Proskauer’s Default Index contains a comparison to default rates published by the rating agencies, historical trends by “industry and EBITDA bands, defaults by type, defaults in cov-lite loans and defaults by year of origination. It is available only to the Firm’s direct lending clients.”
As noted in the update, Proskauer are 800+ lawyers serving clients from 12 offices located in the “financial and business centers in the Americas, Europe and Asia.”
Since 1875, Proskauer says that it has been devoted to their clients’ successes. Our lawyers are known for their unusually high accessibility, responsiveness and attentiveness.
They claim to go the “extra mile” in order to understand a client’s business — and think like savvy businesspeople in the process.
The Firm’s Private Credit Group is made up of cross-disciplinary finance and restructuring professionals “exclusively dedicated” to private credit investors.
It includes over 110 finance and restructuring lawyers focused on representing credit funds, business development companies and other direct lending funds in the origination and restructuring of “clubbed” and “syndicated credits, preferred equity, special situations and alternative investments.”
During the last five years, Proskauer claims that it has been involved in more than 1,200 deals for 100+ private credit clients across the U.S. and Europe with an aggregate transaction value “exceeding $350 billion.”