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Limited Credit Deterioration and Benign Default Rates in Leveraged Loans
The speaker notes that there is no broad-based credit deterioration, with signs of stress primarily in highly leveraged and floating rate exposed sectors. However, this stress does not indicate a contagion. The default rates for leveraged loans remain low at 1.5%, which is half the long-term average, showing a benign situation. Additionally, the private credit market is now a $1.6 trillion market with only $1 trillion deployed.