US-domiciled private credit vehicles owed banks $349 billion at the end of 2025, even though reported interest is not always paid in cash. The growing use of payment-in-kind interest, found in about 10% of loans analyzed in early 2026, can reduce the cash available to repay funds’ debts and creditors. If banks tighten financing terms or demand repayment, funds may need to sell assets, cut new lending, or offer businesses refinancing on worse terms. This pressure could drive Bitcoin-related selling even though no private credit fund directly held the asset. Barclays reported total private credit exposure of £15 billion, including roughly £1.5 billion in swaps referencing underlying assets.
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