UBS Report: Artificial Intelligence Could Increase Default Rates on Private Loans to 13%

AI Wave Could Shake Private Credit Market

An analysis published by UBS Group AG reveals that the "aggressive" transformation artificial intelligence (AI) could trigger in the business world might lead to default rates in the US private credit market rising as high as 13%. This scenario represents the worst-case outcome that could occur if corporate borrowers fail to adapt to the rapid change driven by AI.

Initial Signals Emerging in the Market

The analysis points out that some recent developments support these concerns. For example, at the end of January, BlackRock TCP Capital Corp., which can be likened to a closed-end fund structure, announced it would write down its net asset value per share by 19% for the fourth quarter of 2025. This development was recorded as a notable event in the private credit market, which has been quite active recently.

Experts Look at the Broader Picture

However, industry observers emphasize that such individual developments do not mean a widespread correction is imminent. Sector representatives, while assessing the current situation, state, "Although we see a modest increase in defaults this quarter, the broader picture shows the stability and resilience of the private credit market. As lenders manage changing macroeconomic conditions, we see the sector adapting well." This statement supports the view that the market is generally resilient.

At a time when global investments in artificial intelligence technologies have reached record levels, the potential ripple effects of this technology on financial markets are also being closely monitored. AI investments reaching the $3 trillion level and the accompanying debt increase concerns make the risk scenarios outlined in the UBS report even more meaningful.

Expectations for the Coming Period

Analysts note that in the coming period, how quickly and effectively companies adapt to the AI transformation will directly impact their debt repayment capacity and, consequently, the health of the private credit market. In addition to technological adaptation, the course of general economic conditions is also among the critical factors that will determine default risks.