Blog Post
Private credit funds reckoning with underperforming companies
Geoff Burrows, Assistant Editor
For months, Octus has tracked the widening fractures within private credit. Over the past eight weeks, those fractures have become impossible to ignore. Managers are sending notes to shareholders on redemption gates — a direct signal of eroding confidence in their own vehicles.
Individually stressed loans are now surfacing as private credit funds confront exposure to underperforming companies. Even healthcare, historically M&A’s most resilient sector, is not immune. GoHealth, a publicly listed Medicare insurance marketplace carrying private credit-financed debt, illustrates the dynamic: a combination of public disclosures on deteriorating headwinds and Octus reporting on company-side restructuring advisor mandates led last week to news that the company is weighing a Chapter 11 filing to address what it described as a “materially different Medicare environment.”
Affordable Care, a dental service organization, offers another data point. Octus BDC sector coverage of dental rollups, coupled with reporter-sourced intelligence on the company’s direction, shed light on a private credit-backed borrower under stress — and on broader sector fragility.
Deals, however, are still getting done. Following Octus’ scoop on Clearlake pursuing New Mountain Capital’s sale of Qualus, the engineering and grid services provider secured $1billion in private credit financing to support its acquisition. Private credit may be growing more selective and rotating away from software assets, but capital remains available for the right credits.
Octus subscribers can now access a full roundup of our latest BDC coverage – across manager earnings and sector analyses – to dive deeper into areas of market tension.
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