Syz the moment

Cliffwater’s $33B flagship fund capped redemptions at 7% after investors requested 14%—a record, per Bloomberg. Morgan Stanley limited withdrawals to 5% from its North Haven Private Income Fund, and BlackRock recently imposed limits at 9.3%. Pressure spreads as JPMorgan marks down software-linked loans and tightens lending to private credit firms due to concerns over credit quality, loan valuations, and AI disruption. Public BDCs are also under stress: FS KKR Capital ($FSK) saw its NAV premium collapse over 40 points, and Hercules Capital ($HTGC) dropped roughly 30 points. Investors seek liquidity, but options are shrinking. The key question: when will the broader market take notice? Source: FT, Global Markets Investor

- Blue Owl: -44% - Blackstone: -35% - Wells Fargo: -21% - Morgan Stanley: -15% - BlackRock: -15% - Goldman Sachs: -14% - JPMorgan: -13% $OWL $BX $WFC $MS $BLK $GS $JPM Source: Phil Rosen @philrosenn

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

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

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

Treasuries (upper chart) were a bloodbath yesterday with yields up 5-8bps (long-end lagging, now up 10bps on the week)... High Yield OAS spreads (lower chart) have begun to widen (credit underperformed stocks yesterday) Something to keep a very close eye on. Source: zerohedge

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

Source: Trend Spider