Marc Rowan is not trying to hide the private-credit pain.
At Bloomberg Invest in New York on Tuesday, March 3, the Apollo Global Management CEO said the $1.8 trillion private-credit industry faces a “foreseeable” prolonged shakeout.
“And all you can do is have been a good underwriter, a good risk manager, and have done a small number of stupid things,” Rowan said.
Days prior, MidCap Financial Investment Corp. (MFIC), an Apollo-affiliated BDC, cut its dividend by 18% to $0.31 per share.
Its recorded losses were tied to many of its software companies in its loan book.
Private credit has been taking a lot of hits. The market punished Apollo alongside other asset manager giants. As of 2026, APO shares are down 30%, Reuters reported.
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Apollo is betting on its pain to prove a point about overexposure
The core of Apollo’s argument isn’t that private credit was doomed from the start, but that the heavy software concentration was the original wrongdoing.
It goes back to basic finance 101. Overexposure in any particular sector carries concentration risk.
About 86% of Apollo’s fee-earning assets are in private credit, according to Morningstar. And Apollo noted that “the vast majority of private credit is private investment-grade credit,” so prioritized as senior, first-lien structures, not the leveraged SaaS loans trading at distressed levels (PMI).
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When the cycle turns, first lien lenders get prioritized first in restructuring. But in the scenario of junior unsecured paper in a mid-tier software company that has compressed multiples? That’s who faces covenant violations and steep haircuts.
Apollo (per Morningstar) and Blackstone are down 12% year to date. Ares dropped 15%, and KKRis almost 16% down, while Blue Owl is close to 18%. It’s a sector-wide issue that has spared no major alt credit manager.
The private-credit stress point is an opportunity
The numbers make things a bit tricky. According to Fitch, the U.S. private credit default rate reached 5.8% through the year to January 2026, which is the highest since the index was launched in August 2024.
In February alone, 11 default events had been recorded, which is almost double 2025’s monthly average, Funds Society noted.
In the scenario of a severe AI disruption, UBS warns that the existing figure could reach 13%, Bloomberg reported, which is 2x the stress forecast for leveraged loans.
NYU Stern School of Business Professor Aswath Damodaran published a scenario analysis on AI disruption that identifies software and financial intermediaries as the most likely first targets for AI-driven “displacement,” industries that currently form the backbone of private credit’s loan books.
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