Private Credit’s Smaller Debt Wall Has a Riskier Mix
Lincoln data shows a smaller private-credit maturity wall but a weaker mix of 2027 debt. Early refinancing talks can preserve borrowers’ options.
The actual story.
Lincoln International’s Nov. 3 private-market update shows company valuations rising while some borrowers face a harder refinancing test. Its enterprise-value index gained 2.8% in the third quarter, driven by earnings growth rather than higher valuation multiples.
MDN’s earlier look at private equity’s debt wall explains why refinancing is becoming a particular test for software companies.
The warning sits in an October analysis of upcoming maturities. In Lincoln’s data, debt due in 2027–2029 fell $76.5 billion, or 15%, between Q4 2025 and Q3 2026. Yet the share of 2027 borrower debt associated with first-lien or unitranche loans valued below 90% of par climbed from 15.3% to 30.7%. That represents $22.9 billion of $74.7 billion due in 2027.
A discounted loan valuation signals concern, not a prediction of default. Lincoln suggests stronger borrowers may be refinancing first, leaving a weaker mix behind.
The headline default number offers only partial reassurance. Lincoln’s size-weighted covenant default rate fell to 2.5% from 2.7%. Separately, it reported that 6% of loans used what it calls “Bad PIK”: payment-in-kind interest introduced after closing on loans originally made without it. That defers cash interest rather than eliminating the obligation. These measures cover different things and cannot be added into a combined default rate.
For owners and finance teams with debt due next year, the useful question is how much a lender would refinance today. Build a cash-flow forecast through the actual maturity date, test weaker earnings and higher financing costs, and compare available debt capacity with the repayment amount. A shortfall is the cue to discuss alternatives with lenders and advisers before the deadline limits the choices.
A smaller maturity wall can still leave tougher loans to refinance. For a company with debt due in 2027, start lender discussions now and test the cash available after debt service. If a new loan will not cover the balance, compare an extension, fresh equity or an asset sale early. Staying current on interest is not the same as having a workable maturity plan.
Receipts, not rumors.
Read the original reporting: Lincoln International
The reporting above provides context. Illustrations are editorial interpretations, not source photographs.
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