Private Credit's Next Cycle Will Be Defined By Recovery Rates: KKR Report

A KKR report suggests that recovery rates, not default rates, will be the defining factor of the next private credit cycle. The report, led by Kris Novell, emphasizes that broader definitions of default, including PIK interest and amend-and-extend transactions, indicate early financial stress. KKR anticipates recovery rates could drop significantly below historical averages, with effective portfolio management and quality origination being key for success in this challenging environment.

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