Number three of our five themes for 2025: “Default position: Discipline and careful portfolio construction will keep portfolios clean.” 

There are clear reasons for a more bullish sentiment to take hold in private capital investment in the year ahead. A more certain macro backdrop, a decisive election result, US companies reporting above-expectation results, and the S&P 500 building on a strong 2023 by rising more than 25% in 2024, are building optimism.

Adding to this is the benign default environment for managers that structured deals appropriately in previous low-rate years. Proskauer’s private debt payment and bankruptcy default rate stood at just 0.70% in Q3 2024 (see our Chart of the Week). This compares favorably with the 4.47% BSL default rate reported by Fitch. The slight increase seen since mid-2023 comes from a low base and remains well below large caps.