Speed Matters in Credit Market Downturns
When credit markets unwind, timing is crucial. JPMorgan Chase, with its conservative private credit practices, may be among the first to reduce exposure and trigger margin calls. Early movers often limit losses, as seen with Goldman Sachs versus Credit Suisse during the Archegos collapse, where slow reaction cost Credit Suisse $5.5 billion. Credit cycles punish slow responses, not analysis. As leverage rises and growth slows, the key question is: which banks will be last to adjust? JPMorgan may demand more collateral on private credit loans, signaling declining collateral values since origination. Source: Desiree Fixler @desireefixler
Another one!! $33 Billion Cliffwater Private Credit Fund limits redemptions to 7%, half of what came in Blue Owl, Blackstone, BlackRock, JP Morgan, Cliffwater... so what's going on?
Private credit funds limit withdrawals because their assets private loans are illiquid and rarely traded. When redemption requests rise, managers must either sell assets at discounted prices or cap withdrawals; most choose caps to protect remaining investors. Semi-liquid funds therefore offer higher yields but reduced liquidity, especially during market stress. Source: Barchart
This chart keeps deteriorating.
The major private equity houses have had their stock prices collectively lopped by more than a third, yet the S&P 500 sits 3% below record highs. Disconcerting. Source: Jeff Weniger, WisdomTree Afficher la traduction
Glendon Capital warned that some private credit funds
especially those managed by Blue Owl Capital—may overvalue loans relative to market prices. For example, junior debt of Cornerstone OnDemand was valued near 90¢ while its senior debt traded around 78¢. Similar gaps appear for Barracuda Networks, Peraton, and Conair Holdings, suggesting possible future write-downs as stress grows in private credit markets. Source: FT
BREAKING: Private credit
Source: Trend Spider
Private Equity's Dry Spell Worse than 2008 Crisis
Source: Barchart
How are alternative asset managers stocks doing?
Source: Nico 15% only 🇨🇭🇹🇭 @NicoGladia
Shares of alternative asset managers tumbled on Thursday
After Blue Owl Capital Inc. restricted withdrawals from one of its retail-focused private credit funds, a fresh blow to a sector that’s faced heightened scrutiny in recent weeks. ... The selloff extended to Europe as big private equity players there tracked US peers lower in afternoon trading. CVC Capital Partners Plc fell as much as 4.5% in Amsterdam, while Switzerland’s Partners Group Holding AG slid as much as 5.3%. Source: zeibars @zeibars
