Defaults on loans to high-risk borrowers have skyrocketed by 250 per cent, according to the Bank of England’s latest Financial Stability Report. Global defaults on leveraged loans have risen from 2 to 7 per cent since early 2022, with 73 per cent of these loans tied to private equity-backed firms, the report said.
Though defaults have not yet reached the 12 per cent peak seen during the financial crisis, the BoE is concerned about potential economic spillovers from the private equity sector, which now finances around 10 per cent of the UK’s private sector workforce.
