CCC warning: what Swiss pension funds must watch in private credit
A credit manager warns of defaults among weak borrowers. What matters, however, is the individual holdings, their valuation and the availability of money – not a blanket label.
Refinancing is becoming increasingly difficult for particularly weak borrowers: credit manager Bruce Richards issued this warning via Bloomberg on 26 October 2026. The head of CVC Marathon sees hardly any way out other than default for part of the riskiest borrowers. That is one market participant's assessment, not an official forecast for Swiss retirement assets.
The warning still deserves attention. Swiss pension funds also invest in debt claims through various asset classes. But anyone who derives a crisis of the second pillar directly from this skips decisive questions: which borrowers stand behind the investments, how are the loans secured and how much money remains tied up over the long term?
CCC and private credit mean different things
Under S&P Global's definition, a CCC rating means that the fulfilment of financial obligations depends heavily on favourable business, financial and economic conditions. Such a rating is a clear warning signal. But it is not identical with a default that has already occurred.
Private credit, by contrast, describes a form of financing: loans are negotiated privately outside the publicly traded bond market, often through specialised funds. An analysis by the US Federal Reserve from August 2026 shows overlaps with the market for so-called leveraged loans, meaning loans to more heavily indebted companies. Both markets often serve borrowers below the investment-grade category considered sound.
Nevertheless, the terms are not interchangeable. Not every private loan is of CCC quality; conversely, publicly traded debt securities can also carry this credit grade. For a Swiss investor, what counts is therefore the concrete portfolio and not merely the label on the fund prospectus.
What the Swiss figures actually show
In its report for 2025, the Occupational Pension Supervisory Commission (OAK BV) reports alternative investments at 6.9 percent of the overall investment strategy. These include private equity, hedge funds and alternative debt claims. Alternative debt claims account for 1.2 percent. These categories are not a breakdown by CCC ratings.
It would therefore be wrong to count all alternative investments as endangered private credit. Nor does the table yield a specific Swiss loss amount. Moreover, these are reported strategy shares for 2025, not a real-time measurement of all credit positions in October 2026.
Three routes through which losses can arise
The first risk lies with the borrower. If a company has to replace an old loan with a more expensive new one, its interest burden can rise. If refinancing fails, restructuring or default loom. Whether creditors get their money back depends among other things on collateral and on their rank relative to other creditors.
The second risk concerns valuation. Assets that are not traded daily are often valued using models. An OAK specialist article from 2023 already explains why such values can fluctuate less than stock market prices. Yet a calmer curve does not prove that the economic risk is smaller. A later revaluation can make losses visible.
Third, liquidity can become scarce. Long-dated loans cannot be sold at any speed. Funds that offer investors regular redemptions therefore deserve particularly careful scrutiny. In May 2026 the Federal Reserve reported increased redemption requests at certain US credit funds. Many limited payouts to five percent of fund assets per quarter. That protects against rushed sales but restricts investors' access.
At the same time, the central bank saw liquidity buffers: at the large US funds examined, available bank credit lines and cash holdings were arithmetically sufficient for at least three quarters of limited net redemptions. That argues against a blanket diagnosis of immediate payment distress. It is, however, a snapshot from May and no all-clear for every fund.
Not every adjustment is already a collapse
In a September analysis, Moody's stresses that risks are unevenly distributed. Among the things to watch are interest that is not paid in cash but added to the debt, as well as additional leverage at fund level. Such structures require close examination; they are not in themselves proof of a default.
For Swiss pension institutions this yields a concrete task: examine credit deterioration, valuation methods, redemption rules and available liquidity together. For insured members, a blanket loss forecast is of little help. A serious assessment starts with the actual positions and the financial capacity of one's own fund – not with the pointed warning of a single manager.
Sources
- Federal Reserve: comparison of private credit and leveraged loans, 11 August 2026
- OAK BV: report on the financial situation of pension institutions 2025, in particular page 33
- Federal Reserve: Financial Stability Report May 2026, funding risks
- S&P Global Ratings: meaning of the rating grades
- Moody's: four risk signals in the private credit market, 25 September 2026
- Soziale Sicherheit CHSS / OAK BV: changed investment risk of pension institutions
- Bloomberg: warning from Bruce Richards, 26 October 2026
- Title image: SISHION / Wikimedia Commons
- Title image licence: CC BY-SA 3.0
- Article image: Ron Dicker / Wikimedia Commons
- Article image licence: CC BY-SA 4.0
