The private credit sector is facing a significant stress test as high interest rates persist and borrowers continue to pay near-peak coupons. S&P has warned that UK pension insurers are increasing their exposure to illiquid private credit assets, which now exceed 10% of portfolios at firms like L&G and Standard Life. While US regulators have spent years attempting to clamp down on specific structured debts, insurers have reportedly shifted into alternative risky debt instruments to bypass regulatory oversight.
