In this apparently normal market context, one of the most dynamic upheavals of the financial system has become an unholy disgrace. The global private credit market is facing an unpleasantness: what happens when growth, liquidation and trying to fit in at the same time.
Blue Owl’s recent decision to suspend the reels on one of its bottoms does not address the immediate problem that needs to be addressed. It’s something more revealing. It is not a crisis, but a temporary signal that certain structures are comfortable in the expansion phase of the cyclethey need to exert themselves when conditions change.
This adjustment coincides with a quiet – and more worrying – shift within the industry itself. Another AIMA, The global private loan market grew by $3.5 billion in low-income businesses.
Groups like KKR, Sixth Street or their own Blue Owl, According to KBW estimates, they have committed to buy $136,000 million for consumption up to $10,000 million in the previous year. This is not traditional corporate debt, except for credit rates, personal loans and deferred payment products, mostly unsecured and unreimbursed.
Change is not trivial. The idea of non-guaranteed consumption is by definition more sensitive to the economic cycle and less predictable in slowdown scenarios.
The size and integration of private credit into cards explain why these important decisions
Private capital was entering this segment with such force that the factory was uncomfortable with the standards of risk concentration. It could be argued that while the most traditional styles in the deuda market are treading carefully, Private equity is accelerating.
The size and integration of personal loans into credit cards explains why these important decisions. University endowments and pension funds have raised their allocations to alternative assets – including credit – to 10-15% of the total, representing the highest quality issues such as government debt. For this reason, it has been said that income can be lived without friction with periodic liquidation and constant expansion of credit.
What is beginning to bloom is a potential crisis of expectations. The nervousness that shaped you to withdraw more than $7,000 million from some of the biggest funds on Wall Street in the last months of last year between First Brands and Tricolor.
When the relevant manager recognizes that liquidity is tight, the market begins to look at the rest of the sector differently. There is no such thing as technical contagion for financial contagion. Enough with this question of the idea that all assets can be converted into an effect when the flipper so desires.
The context does not help to resolve these doubts. Values are demanding, Efforts are up and much of the recent growth is avoiding continued favorable financial conditions.
Rare modifications are often found around the most visible markets. You can do this in brands, in the most complete products, and in promises that seem safe until they are forgotten.
None of this means that private credit is doomed, nor that we’ve left before the immediate end of the burbuja. Cycles are not interrupted by coups. If it moves. Reel suspension and driving without guaranteed consumption are symptoms of this malfunction.
For turners, the reading is uncomfortable, but clear. Diversification is not about accumulating alternative assets until I understand what I can consume, where it is concentrated and when it can materialize.
When the market is ready to liquidate and is filled with more credit, it is worth listening. Not because the release is immediate until the tone changes. And in finance, there is always a case where everything is fulfilled.
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