Moody’s: US private credit stress masked by growing payment-in-kind use

TREE NEWS reports: Moody’s Ratings said US private credit borrowers are avoiding defaults by deferring interest payments and extending maturities, potentially masking the extent of credit stress. The default rate among private credit borrowers Moody’s assessed was 4% in the 12 months to June, but rises to 5.8% when payment-in-kind amendments and maturity extensions are included. Recent financial statements show 17% of borrowers are using payment-in-kind, which lets companies add interest to outstanding debt instead of paying cash.