LONDON, May 12 (Reuters) -

Private credit funds have marked down more than a tenth of their

loans by at least 50%, new data from MSCI showed, as corporate

borrowers in this $3.5 trillion market struggle with growing

debt burdens.

MSCI said in a report released on Tuesday that a loan valuation

of less than 50% was "a level typically associated with deep

distress or risk of restructuring," citing a sustained period of

relatively high interest rates as one reason borrowers were

struggling.

In recent days, big players in private debt including Carlyle,

Blackstone and BlackRock ( BLK ) have cut the value of their credit

funds and regulators have warned about systemic risks arising

from major banks lending to these asset managers.

Some of the main findings from the MSCI report:

* MSCI's data showed that private credit funds' loan

writedowns were at the highest level since the aftermath of the

COVID-19 pandemic.

* Smaller private debt funds were experiencing the most

borrower distress, MSCI found, with 13% of their loans now

valued below 50 cents on the dollar.

* MSCI's writedown data was collected in the third quarter

of 2025, the most recent available from private credit funds

that often report performance with a long lag.

* Delayed reporting by private debt funds had contributed to

the trend of investors cashing out of stock market-traded credit

vehicles known as business development corporations (BDCs), MSCI

said.

* Private debt funds' returns slumped to 1.8% in the fourth

quarter of 2025 from 3.7% six months earlier according to MSCI's

calculation method that separates investment performance from

the money funds receive from investors or pay out.

* In a survey accompanying this report, MSCI found that a

third of investors said they lacked access to private market

data that they fully trusted.