Pensions and insurers hold the exposure as US$300 billion in loans comes due from 2028
Returns for private equity funds have dropped below 10 percent in recent years, from around 15 percent when interest rates were nearly zero.
PitchBook data cited by The Wall Street Journal carry that decline, and the Journal reported that private equity returns are paid out to investors including pensions, insurers and wealthy individuals.
About US$140bn in risky corporate loans are scheduled to mature in 2028 and another US$160bn in 2029, according to the same PitchBook data.
From 2023 to 2025, an average of about US$60bn was due in any two-year window.
Software companies account for about one-third of the loans coming due across the two years, and about one quarter carry junk ratings of CCC-plus or below.
“There are going to be businesses that get the keys tossed back to the bank and don’t make it,” said Hugh MacArthur, chairman of Bain & Co.’s global private-equity practice, in the Journal’s report.
Mark Jenkins, head of global credit at Carlyle Group, told the Journal, “You had an incredible market to refinance in, but we don’t anymore and there’s nothing in my mind that says rates are going down for the foreseeable future.”
Bank of America forecast that the default rate for below-investment-grade corporate loans will double next year to 4 percent and that creditors will recover less on those bad loans, as per the Journal.
Private equity growth investments in defence reached US$4bn in the first nine months of 2026, up from US$500m in 2024, PitchBook data cited by CNBC show.
Those deals accounted for 41 percent of defence private equity deal value in 2026, against 3 percent in 2024.
“Private equity firms are putting more money into defense, and they are changing how they do it,” Jim Corridore, lead industrials analyst at PitchBook, told CNBC. “It is clear to me that PE is moving into territory VC used to own.”
Defence technology companies are increasingly valued on technological promise rather than revenue, profit or order books, Shonnel Malani, managing partner and global head of aerospace and defence at Advent International, told CNBC.
Asked whether an investment bubble could emerge, Malani said, “I think there is a very big risk of that,” describing “a lot of froth in the system” and investments Advent walked away from because valuations had become “silly.”
PitchBook recorded 504 defence private equity deals and 101 exits since 2021, CNBC reported, noting the comparison includes add-on acquisitions.
Initial public offerings accounted for 70 percent of defence private equity exit value through September 2026, leaving investors exposed to changing stock market conditions.
The first Canada Investment Summit closed in Toronto on September 15, 2026 with nearly $500bn in new investment commitments, the Prime Minister’s Office announced.
Canada’s leading pension funds, insurers, and institutional investors committed nearly $100bn in new capital to Canadian assets, with CIBC providing $2bn in financing to small and medium-sized defence-related and dual-use businesses in Canada, and Ottawa deploying $700m through the Business Development Bank of Canada for defence and dual-use technologies.
National Defence Minister David McGuinty hosted a roundtable in Toronto on July 28 with senior representatives from Canada’s largest pension funds and federal partners on strategic defence and dual-use projects, per a National Defence news release.
