Private credit is showing increasing signs of strain as default rates reach recent highs and quarterly reports from funds run by some of the industry's biggest players indicate that loan health and investor returns are worsening. The trend challenges recent efforts by large fund managers to present the sector as moving beyond a difficult year. Private credit, a fast-growing market for lending outside traditional banks, has become an important source of financing, making signs of weaker credit quality and softer performance closely watched across markets. A Wall Street Journal analysis of recent fund disclosures suggests that the pressure is becoming more visible in both borrower performance and the results delivered to investors.