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U.S. Banks Hike Borrowing Costs for Private Credit Funds

3/31/2026

Summary

Story summary

U.S. banks are raising borrowing costs for private credit funds, including back leverage facilities tied to business development companies, with spreads about 2 percentage points over Secured Overnight Financing Rate (SOFR).
The rise reverses a trend of lower rates, driven by valuation concerns around software loans and credit worries after bankruptcies.
Analysts warn higher costs could limit funds’ ability to invest and manage liquidity in the $2 trillion market.

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Story summary

U.S. banks are raising borrowing costs for private credit funds, including back leverage facilities tied to business development companies, with spreads about 2 percentage points over Secured Overnight Financing Rate (SOFR).
The rise reverses a trend of lower rates, driven by valuation concerns around software loans and credit worries after bankruptcies.
Analysts warn higher costs could limit funds’ ability to invest and manage liquidity in the $2 trillion market.