Private credit funds owe banks $349 billion in outstanding loans at end-2025, creating cash flow mismatch risk

As of end-2025, US-domiciled private credit vehicles owed banks $349 billion in outstanding loans. These funds can accrue interest through Payment-in-Kind (PIK) arrangements, allowing borrowers to add interest to debt rather than pay cash. However, banks expect cash repayment, creating a liquidity mismatch. The total US private credit market holds over $2.6 trillion in assets, with $349 billion specifically representing bank borrowings by these funds.