Partners Group chair Steffen Meister has warned that private credit default rates could rise sharply in the coming years as artificial intelligence reshapes economic activity, the FT reported.

Meister told the Financial Times that lenders in private credit may face greater downside risk from AI-driven disruption. However, they may capture only limited upside from the transformation.

He explained that artificial intelligence could lead to a wider divergence in corporate performance. As a result, some companies may perform exceptionally well, while others struggle significantly. According to Meister, this dynamic could affect private credit more heavily than private equity.

Investor scrutiny of the roughly $2trn private credit market has increased in recent months. Concerns centre on weakening credit quality and the exposure of many lenders to software companies whose business models could face disruption from artificial intelligence.

Meister noted that private credit default rates averaged 2.6% annually over the past decade. He said defaults had been “so low” that lenders built diversified portfolios of loans and then applied additional leverage.

Market anxiety has also intensified following several high-profile bankruptcies. These include auto-parts maker First Brands and subprime lender Tricolor last year.

The developments have prompted closer scrutiny of a market that has expanded rapidly in recent years. Private credit has attracted significant institutional investment while increasing its role in corporate lending.

Recent market activity has further highlighted investor caution. JPMorgan Chase reduced the value of certain loans to private credit funds after assessing market turbulence around software companies.

Meanwhile, BlackRock said it limited withdrawals from a flagship debt fund following a surge in redemption requests. Blackstone also disclosed that its private credit fund BCRED experienced a spike in withdrawals during the first quarter.

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