Private Credit Q2 2025 Middle Market Borrower Survey Report by KBRA - Delayed Insights on Middle Market Borrowers, Reminiscent of Samuel Beckett's "Waiting for Godot"
In the latest Q2 2025 Middle Market Borrower Surveillance Compendium, credit rating agency KBRA has shed light on the current state of the private credit market, painting a picture of a resilient yet cautious sector. The report reveals that the market is in a prolonged state of anticipation, much like the play "Waiting for Godot."
Despite elevated interest rates and policy uncertainty, KBRA observes signs of improving credit quality for some borrowers. However, a subset of borrowers still faces challenges, particularly those with maturities in the next two years that lack the growth endorsed by their sponsors and borrowers.
The extensive assessment covered nearly 2,400 evaluations of over 2,100 unique middle market-sponsored borrowers globally, with cumulative borrowings exceeding $1 trillion. This broad market coverage offers valuable insights into evolving risks and lender responses amid uncertainty.
KBRA notes that while some underperformance is inevitable in leveraged loans, there is little evidence of widespread credit stress at this time. This finding underscores private credit as a source of systemic strength, despite market volatility.
The report provides granular sector and company-size trends, with surveillance continuing into 2H 2025 to track evolving borrower credit profiles. Median leverage for MM borrowers in this higher interest rate environment appears to have reached a floor at 6.1x.
Moreover, KBRA recorded two payment defaults during the Q2 2025 surveillance cycle, representing 1.1% of the quarter's reviewed portfolio. Revenue and EBITDA performance for this portfolio of obligors broke the trend from prior LTM periods, with revenue-compounded annual growth rate (CAGR) standing firm at 14% and EBITDA CAGR accelerating 100 basis points to 31%.
Key contacts at KBRA for media inquiries are Adam Tempkin, Senior Director of Communications, and Pat Welch, Senior Managing Director, Ratings General. For business development inquiries, contact Constantine Schidlovsky, Senior Director, Michael Caro, Senior Director, or Connie Zhong, Associate. For ratings-related inquiries, contact William Cox, SMD and Global Head of Corporate, Financial and Government Ratings, Andrew Giudici, Global Head of Corporate, Project, and Infrastructure Finance, Eric Baier, Analyst, or Eric Wang, Associate Director. Shane Olaleye and John Sage, Managing Director and Senior Director respectively, are also available for inquiries. All contacts can be reached via their respective emails.
KBRA, a major credit rating agency registered in the U.S., EU, and the UK, and recognized as a Qualified Rating Agency in Taiwan and a Designated Rating Organization for structured finance ratings in Canada, continues to provide valuable insights into the private credit market. As we move forward, the agency will continue to monitor borrower credit profiles and report on trends in the evolving market landscape.
[1] Reference: KBRA's Q2 2025 Middle Market Borrower Surveillance Compendium [2] Reference: KBRA's website [3] Reference: Various KBRA press releases and financial reports [4] Reference: Bloomberg article on KBRA's Q2 2025 Middle Market Borrower Surveillance Compendium [5] Reference: Financial Times article on KBRA's Q2 2025 Middle Market Borrower Surveillance Compendium
News of KBRA's Q2 2025 Middle Market Borrower Surveillance Compendium highlights a resilient private credit market, with signs of improving credit quality for some borrowers despite elevated interest rates and policy uncertainty. The extensive report, which covers nearly $1 trillion in global borrowings, revealed that a subset of borrowers still faces challenges, particularly those with maturities in the next two years.
Despite some underperformance, private credit is deemed a source of systemic strength, as indicated by the lack of widespread credit stress. The report provides insights into evolving risks and lender responses, with a focus on the performance of revenue and EBITDA for the portfolio of obligors.
Investors seeking business development opportunities in the private credit market may find the contact information of key KBRA personnel useful. KBRA, a recognized credit rating agency, continues to monitor borrower credit profiles and report on trends in the evolving market landscape, providing valuable insights for bothmedia and financial professionals.
