U.S. loan funds are seeing sharp outflows this month as the bankruptcy of First Brands Group raises concerns over opaque financing and the robustness of underwriting standards in the private credit market. ...

The richest families in North America are quietly reshaping how they invest their money — trading the high-risk thrill of startups for the steady pull of private credit and property. As of August, private markets accounted for 29% of the average family office portfolio in North America, according to the North America Family Office Report 2025.The report — produced by Campden Wealth, a London-based family office research firm, and RBC Wealth Management, the wealth management arm of the Royal Bank of Canada ...

Accessibility StatementSkip Navigation Former Morgan Stanley Executives Jeff Levin and Kunal Soni Join as Partners Levin Named Head of Thoma Bravo Credit MIAMI and NEW YORK, Oct. 21, 2025 /PRNewswire/ -- Thoma Bravo, a leading software investment firm, today announced that Jeff Levin and Kunal Soni have joined the firm as partners on the Thoma Bravo Credit platform. Levin has also been named head of the platform. Together with the firm's investors, Thoma Bravo Credit has invested over $25 billion across m ...

Mike Segar/REUTERS This post originally appeared in the First Trade newsletter. You can sign up for Business Insider's daily markets newsletter here. Good morning and welcome to the inaugural edition of First Trade. I'm thrilled you're here. Are you still banking on the TACO trade to save your portfolio? The White House says you might be out of luck going forward. Rundown Forget the AI bubble. Why investors should instead be wary of this year's frenzy for crypto treasuries. $5 trillion in wealth cre ...

Core Insights - The recent bankruptcies in the private credit market, particularly involving Tricolor Holdings and First Brands, have raised concerns about the stability of this $3 trillion market, but some analysts argue these issues stem from traditional bank lending failures rather than private credit itself [1][3][4]. Group 1: Market Overview - Major institutions reported significant losses due to exposure to troubled companies, with JPMorgan losing $170 million, UBS over $500 million, and Jefferies $715 million [2]. - The private credit market has expanded from $200 billion to $3 trillion globally in 15 years, indicating rapid growth but also potential vulnerabilities [2]. Group 2: Distinction Between Lending Types - The broadly syndicated loan (BSL) market, which is primarily bank-driven, operates differently from the private credit market, which involves bilateral transactions without secondary market trading [5][6]. - First Brands' bankruptcy was largely tied to BSL debt and receivables factoring, not the direct lending that characterizes private credit firms like Ares and Apollo [6][8]. Group 3: Current Challenges - Covenant defaults in the direct lending market have increased from 2.2% in 2024 to 3.5%, and the use of payment-in-kind (PIK) has risen from 6.5% to 11% of deals [9][10]. - Analysts project that defaults could peak at 5%, which, while higher than historical averages, remains relatively low compared to public market standards [11]. Group 4: Investor Sentiment and Future Outlook - Investor anxiety is attributed to less stringent underwriting standards and the competitive dynamics of unregulated lending, leading to concerns about deteriorating loan quality [12][13]. - Despite the challenges, analysts do not foresee systemic risk to the banking sector, although they expect an increase in bankruptcies among weaker companies [16][17]. Group 5: Risk Management and Transparency - The private credit industry faces a credibility test regarding its risk management and documentation standards, especially as BlackRock increases its investment in this space [17][19]. - Analysts emphasize the need for greater transparency in private credit valuations, which are less clear compared to BSL loans [17].

Group 1 - The article highlights Blue Owl Capital Inc (NYSE:OWL) as a trending stock to watch in the context of AI investments [1] - James Van Geelen from Citrini Research suggests hedging risks in the AI space by investing in companies building data centers while shorting Blue Owl and similar private credit firms [1] - The rationale behind this strategy is that companies constructing data centers have unlimited upside potential, whereas private credit firms face limited upside and significant downside risks [1] Group 2 - The article expresses a belief that certain AI stocks offer higher return potential with limited downside risk [2] - It mentions the existence of an extremely cheap AI stock that benefits from Trump tariffs and onshoring, encouraging readers to access a report on this stock [2]

Core Insights - The private credit market, once seen as thriving, is facing scrutiny and criticism amid recent bankruptcies and losses reported by major financial institutions [2][3][4][7][20]. Private Credit Market Overview - Private credit has grown significantly since the Great Financial Crisis, with firms like Blackstone managing substantial amounts of non-real estate credit, surpassing their private equity assets [14][16]. - The segment has become a competitive alternative to traditional bank lending, particularly in high-risk loans and direct lending to investment-grade clients [15]. Recent Developments - Jamie Dimon of JPMorgan Chase highlighted concerns about potential issues in the private credit sector, suggesting that the presence of one bankruptcy could indicate more problems [3][4]. - Following Dimon's comments, regional banks reported losses, raising fears about the stability of the credit ecosystem [7][22]. Industry Reactions - Executives from private credit firms defended the sector, arguing that recent bankruptcies do not reflect broader market issues and that their portfolios remain healthy [20][21][23]. - Critics, including academics and IMF officials, have raised questions about the sustainability of returns in private credit, suggesting that the industry's performance may not justify its growth [8][9][18]. Market Sentiment - Despite the criticisms, some analysts believe that the private credit market is not on the brink of a crisis, and that the recent bankruptcies are not indicative of a systemic problem [18][19]. - The private credit industry continues to assert its strength, with leaders claiming that the market is more robust than perceived [22][24].

Market Overview - The market is experiencing a "risk-off" sentiment, indicating a cautious approach among investors despite some appetite for risk in certain sectors [1][2] - Recent market movements have shown significant volatility, with a notable recovery after a poor performance the previous week, suggesting a complex trading environment [3][4] Sector Analysis - The healthcare sector presents investment opportunities, with both ETFs and core names showing potential for growth after a period of consolidation [2] - Regional banks are gaining attention as potentially more interesting investments compared to larger money center banks, reflecting a positive outlook on the banking sector [3][8] Performance Metrics - Semiconductors have seen a substantial increase of nearly 6% over the past week, indicating strong performance in this sector [5] - The equal-weighted S&P 500 has mirrored the gains of the market-cap-weighted S&P 500, suggesting broad-based market strength [5][11] Economic Indicators - There is a significant amount of cash on the sidelines, which is expected to flow into the market as interest rates decline, potentially driving further gains [4] - The banking sector's performance has been solid, with several regional banks reporting strong earnings, which reassures the market about the overall economic health [9][10] Investor Sentiment - Investors are currently facing a data blackout, leading to increased volatility as they seek information from limited data points [10] - Concerns about potential contagion from the banking crisis remain, but current indicators do not suggest a systemic threat, reflecting a cautious but optimistic investor sentiment [10][12]

Core Insights - The discussion highlights skepticism regarding the returns claimed by private equity and private credit, suggesting that the perceived advantages may not hold up under scrutiny [1][2][3] Private Equity and Private Credit Performance - Private equity claims a cumulative return of 113% over the last five years, while their levered equivalents have declined by 6%, raising questions about the sustainability of these returns [5][6] - There is a growing concern that private equity and credit firms may not be able to generate the expected returns in a higher interest rate environment, which could impact their overall performance [3][6] Impact on Investors - Large endowments, such as Harvard and Yale, that have heavily invested in private assets are experiencing deteriorating cash and liquidity due to declining payouts, indicating that actual returns may be much lower than reported [6] - The average American and small businesses are likely to be the first to feel the negative effects of potential issues within private credit markets [7][8] Regulatory Concerns - There is a significant amount of lobbying activity aimed at promoting private equity for retail investment vehicles like 401(k)s, raising concerns about the protection of less sophisticated investors [10][11] - The current regulatory environment may not adequately safeguard individual investors from the risks associated with private equity and credit investments [10][11]

Core Viewpoint - The current credit issues in the market are being debated as either isolated incidents or indicative of broader systemic problems, with concerns about underwriting standards and the potential for more widespread impacts on the financial sector [1][10][12]. Group 1: Market Performance - Since September 24, alternative asset managers have seen significant declines, with Aries down 22%, KKR down 20%, Blue Owl down 15%, and Blackstone down 14% [3]. - Business Development Companies (BDCs) have also experienced losses, with Main Street Capital down 11% and Blackstone secured lending down 5% [4]. Group 2: Investment Strategies - Some investors, like Brent Talkington, argue that the current issues are overblown and are taking positions in Aries Capital and Blue Owl Tech, citing potential for recovery and transparency in their investments [4][6]. - Blue Owl focuses on software lending and has a diverse portfolio of 198 discrete tech investments, offering yields around 10% [7][20]. Group 3: Underwriting Standards - Concerns have been raised about the lowering of underwriting standards due to high demand for leveraged loans, which may expose weaknesses in the market [9][12]. - The private credit market is less regulated than traditional banking, leading to potential risks associated with loan quality and borrower profiles [12][16]. Group 4: Market Sentiment - There is a general sentiment of caution among investors regarding the private credit market, with some believing that the current issues could underpin broader market challenges [15]. - The ongoing pressure on consumers and the potential for increased defaults in subprime lending and auto lending are additional concerns for the market [14].