CALGARY, AB, CANADA, February 23, 2026 /EINPresswire.com/ — Omnigence Asset Management (“Omnigence”) has released a new research report titled, Are the Private Credit Markets Under Stress? PIK Usage & Covenant Erosion May Tell the Tale, examining emerging risk indicators within the $3 trillion private credit market.
The analysis finds that 11% of borrowers paid interest in-kind (“PIK”) in Q4 2025, marking the third consecutive quarterly increase. Of greater concern, 58% of those PIK loans are classified as “bad PIK,” meaning interest deferrals began mid-loan due to liquidity constraints rather than at origination. As a result, 6.4% of all private loans now carry bad PIK, nearly triple the 2.5% level observed in late 2021.
Omnigence’s research further notes:
• U.S. private credit default rates have risen to 5.7%, up from near zero in 2022
• EBITDA growth slowed steadily through 2025, limiting organic deleveraging
• Covenant-lite loans historically recover 9 percentage points less than covenanted loans on first-lien positions
The report concludes that the convergence of rising PIK usage, weakening covenants, and slowing operating performance may represent an early warning signal rather than a temporary dislocation. With 30–40% of deals maturing in the next two years already extended once, refinancing risk may intensify if credit conditions tighten further.
The full report is available at https://omnigenceam.com/insights/are-the-private-credit-markets-under-stress-pik-usage-covenant-erosion-may-tell-the-tale
About Omnigence Asset Management: Omnigence Asset Management is a Canadian alternative investment platform specializing in farmland, operational private equity, and secondaries. With offices in Toronto and Calgary, the firm is committed to helping investors preserve purchasing power and build durable portfolios in a structurally challenging macro environment. Omnigence has grown to over CA$1 billion in platform assets by focusing on what it describes as the neglected middle, investment opportunities that are too small or too operationally complex for large institutions and traditional alternative managers.
DISCLAIMER: Our reports, including this paper, express our opinions which have been based, in part, upon generally available public information and research as well as upon inferences and deductions made through our due diligence, research and analytical process. The information contained in this paper includes information from, or data derived from, public third-party sources including industry publications, reports and research papers. Although this third-party information and data is believed to be reliable, neither Omnigence Asset Management nor its agents (collectively “Omnigence”) have independently verified the accuracy, currency or completeness of any of the information and data contained in this paper which is derived from such third party sources and, therefore, there is no assurance or guarantee as to the accuracy or completeness of such included information and data. Omnigence and its agents hereby disclaim any liability whatsoever in respect of any third-party information or data, and the results derived from our utilization of that data in our analysis. While we have a good-faith belief in the accuracy of what we write, all such information is presented “as is,” without warranty of any kind, whether express or implied. The use made of the information and conclusions set forth in this paper is solely at the risk of the user of this information. This paper is intended only as general information presented for the convenience of the reader and should not in any way be construed as investment or other advice whatsoever. Omnigence is not registered as an investment dealer or advisor in any jurisdiction and this report does not represent investment advice of any kind. The reader should seek the advice of relevant professionals (including a registered investment professional) before making any investment decisions. The opinions and views expressed in this paper are subject to change or modification without notice, and Omnigence does not undertake to update or supplement this or any other of its reports or papers as a result of a change in opinion stated herein or otherwise.
Matt Barr
Omnigence Asset Management
+1 587-393-0893
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