Wall Street banks are tightening lending to private-credit funds as market jitters spread, with concerns over valuations and transparency prompting firms to curb risk. According to Reuters, major U.S. banks have almost $300 billion in loans outstanding to private-credit providers and a further $285 billion lent to private-equity funds.
Key Takeaways
Wall Street banks are tightening lending to private-credit funds as market jitters spread, with concerns over valuations and transparency prompting firms to curb risk. Major banks like JPMorgan and Morgan Stanley have re-marked loan values and limited redemptions in response to investor withdrawals. Private-credit funds managed by Ares Management, Apollo Global, Oaktree, and Goldman Sachs are yet to update investors on first-quarter tender offers.
- Wall Street banks tighten lending to private-credit funds amid market jitters
- JPMorgan re-marks loan values due to software sector turmoil
- Morgan Stanley limits redemptions at one of its private-credit funds
- Blackstone's BCRED fund raises redemption cap to 7% after surge in withdrawal requests
- Blue Owl Capital sells $1.4 billion in assets and halts redemptions at one fund
The largest U.S. bank, JPMorgan, has reduced the value of some loans to private-credit funds after reviewing the impact of market turmoil around software companies. The re-marking does not happen often but is important when markets warrant it rather than waiting for a crisis to come along, according to a source familiar with the situation.
Morgan Stanley has limited redemptions at one of its private-credit funds after investors sought to withdraw almost 11% of shares outstanding. The world's largest asset manager, Blackstone, said on March 2 that its flagship private-credit fund, BCRED, saw a sharp rise in withdrawal requests in the first quarter.
Private capital firm Blue Owl Capital said on February 19 that it was selling $1.4 billion in assets from three of its credit funds to return capital to investors and pay down debt. The loans are held through three credit funds, with the biggest concentration (13%) in the battered software and services sector.
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