#USA #San Francisco #private credit #Heron Finance #Benchmark Report

Overview of the State of Private Credit Benchmark Report

Heron Finance has recently unveiled its State of Private Credit Benchmark Report (Q2 2026 edition), a comprehensive publication that offers industry professionals, investors, and media a detailed analysis of the performance trends across 73 of the largest private credit funds in the world. This report is invaluable for anyone looking to understand the current landscape of private credit.

Key Highlights of the Report

The findings are based on detailed quarterly fund-level data extracted from SEC filings and manager reports as of the end of Q4 2025. Collectively, these funds manage over $1 trillion in private credit assets. The report highlights performance metrics across a two-year historical framework to emphasize shifting trends in borrower stability, fund leverage, and returns in the private credit sector.

Notable Insights from Khang Nguyen

Khang Nguyen, the Chief Credit Officer at Heron Finance, states, “This report tracks essential risk metrics and performance indicators across the U.S. private credit landscape quarterly.” He further notes, “The industry continues to showcase resilience, particularly in areas like PIK interest and non-accruals, although it's notable that the disparity between high-performing and lower-performing funds is becoming more pronounced.”
Nguyen observed a significant differentiation within the private credit market, pointing out that while lower middle-market funds show elevated non-accrual rates, actual losses have been limited. This situation reflects trends of reduced leverage and stronger borrower loan parameters.

Key Findings from the Report

The Q2 2026 report reveals several critical findings:

• - PIK Interest Trends: Payment-in-kind (PIK) interest has remained stable, with a slight increase noted in Q4 2025, aligning closely with long-term averages.
• - Non-Accrual Rates: The quarter-over-quarter rates exhibited slight declines, predominantly affecting smaller borrowers. However, the overall non-accrual levels were not alarming, given that many of these loans are first liens with low loan-to-value (LTV) ratios.
• - Interest Rates Impact: The average interest coverage ratio for corporate borrowers improved year-over-year, thanks to declining interest rates coupled with some EBITDA growth.
• - Loan Quality: The report confirmed that there has been no significant deterioration in credit risks at the industry level. With an approximate 40% LTV and about 90% of loans classified as first lien, historic recovery rates post-default remain favorable.

Benchmark Metrics Analyzed

The report addresses 11 essential metrics vital to private credit performance, including:

• - PIK Interest
• - Non-Acrual Rates
• - Credit Loss (Net)
• - First Lien Loan Fair Market Value (FMV) versus Cost
• - Borrower Debt to EBITDA Ratios
• - Borrower Interest Coverage Ratios
• - Average LTV
• - Debt to Equity Ratios
• - Loan Yield
• - Annualized Quarterly Total Returns

Each of these metrics comes with historical trend charts that add context and facilitate comparisons across different market segments.

Conclusion

The State of Private Credit Benchmark Report stands as a crucial resource for stakeholders in the private credit landscape, delivering insights that can guide future investment strategies and risk assessments. For further details or to access the complete report, visit Heron Finance's official blog.

About Heron Finance

Heron Finance specializes in offering diversified investment portfolios across private markets for individual investors and family offices. Their platform offers exposure to over 25 funds and includes access to more than 10,000 private credit, equity, infrastructure, and real estate investments. The company provides a streamlined digital investment experience with low minimum investment thresholds, monthly subscription options, and no multi-year lock-up policies, making it easier for individual investors to navigate the realm of private markets efficiently.