Private-Credit Lenders Slash PIK Sweeteners as 'Shadow Defaults' Mount
BX sits 39% above its 52-week low of $101.73.
Summary
Private-credit firms, including Blackstone and KKR, are sharply reducing payment-in-kind (PIK) provisions in new loans — down to 13.5% of Q2 originations from 25% at end-2025 — as fears of 'shadow defaults' grow. The pullback follows the completed creditor takeover of software firm Medallia, where Blackstone led a lender group that wiped out Thoma Bravo's ~$5B equity. PIK deferrals, especially those granted after origination, are increasingly seen as precursors to default; 11% of outstanding private-credit loans now carry partial or full PIK, up from 7% in 2021. For Blackstone, the trend signals tighter underwriting and potential pressure on income recognition, as PIK income — essentially IOUs — has been a growing share of interest revenue. The article highlights a broader industry shift that could compress deal volumes and returns in private credit, a key growth area for both firms. KKR is also named as a Medallia lender, but Blackstone's leading role and larger private-credit platform make it the primary ticker.
At the time of this announcement, BX was trading at $141.66 on NYSE in the Finance sector, with a market capitalization of approximately $175.9B. The 52-week trading range was $101.73 to $190.09. This news item was assessed with negative market sentiment and an importance score of 7 out of 10. Source: Dow Jones Newswires.