Private credit's $2T valuation problem, Goldman's senior FICC exec on a client call, and BofA's European high yield desk starts leaking
The private credit market has a valuation problem it can no longer keep theoretical.
Private Credit’s Mark-to-Market Problem Just Got Concrete
The private credit market has a valuation problem it can no longer keep theoretical.
JPMorgan has marked down loans to software companies in several private credit funds’ portfolios, using those assets as collateral. The bank stated the haircuts did not trigger margin calls yet, but the move was pre-emptive: it reduced available credit to those funds before problems compound. JPMorgan is an outlier here because most banks require a missed payment before revaluing collateral. JPMorgan reserves the right to do it anytime.
This is the structural tension in private credit right now:
Private credit funds sell investors on stability. No daily price fluctuations, no public market correlation, no panic selling.
But retail-facing funds like BDCs allow quarterly redemptions at NAV. If the NAV is wrong, investors cash out at par on assets worth less. The remaining investors absorb the difference.
Blue Owl restricted withdrawals from a $1.6B fund and sold $1.4B in loans last month
Morgan Stanley limited redemptions from one of its private credit funds
BlackRock curbed withdrawals following a surge in redemption requests
Apollo, managing $938B in assets, announced it is moving toward monthly NAV reporting on credit funds, with a goal of daily NAVs and third-party valuations over time
The core accounting issue is straightforward: a performing loan to a software company at 8% interest was entered at $100. After Anthropic’s AI tooling spooked software credit markets, a similar loan might only trade at $98 today. The private credit manager’s position is that nothing about their loan has changed. The margin lender’s position is that market price is $98 and that is the number.
JPMorgan is siding with the market.
The YTD performance across public-facing private credit names makes the investor concern visible:
Carlyle Group (CG): Quant Rating Sell | YTD -20.35%
Blue Owl Capital (OWL): Quant Rating Sell | YTD -39.63%
Ares Management (ARES): Quant Rating Sell | YTD -35.99%
KKR & Co. (KKR): Quant Rating Sell | YTD -31.65%
FS KKR Capital (FSK): Quant Rating Sell | YTD -29.44%
Apollo Global Management (APO): Quant Rating Hold | YTD -26.71%
Blackstone (BX): Quant Rating Hold | YTD -30.42%
Ares Capital (ARCC): Quant Rating Hold | YTD -8.60%
Goldman Sachs BDC (GSBD): Quant Rating Hold | YTD -1.19%
Prospect Capital (PSEC): Quant Rating Hold | YTD +2.70%
The Sell-rated names are not underperforming randomly. They are the vehicles with the most direct exposure to redemption risk and leverage.
The deeper issue: private credit expanded by chasing retail capital with semi-liquid vehicles. That expansion introduced the same structural fragility it was supposed to avoid. Institutional capital locked up for years is bank-like in its stability. Monthly or quarterly redemptions at NAV are not.
Goldman’s FICC Co-Head Said the Quiet Part Out Loud
Kunal Shah, co-head of Goldman Sachs FICC, was on a client call this week to discuss the current Iran conflict. He remarked that some Goldman clients were relieved to have something to talk about that was not software exposures and private credit marks.
Goldman’s press office responded that Shah was sharing observations from multiple client viewpoints. That framing misses the point.
The remark may not damage Shah’s standing with hedge fund clients. Those clients grew up in the same trading desk culture where dark humor about geopolitics is unremarkable. Complaining about an off-color remark on a hedge fund client call would be its own professional liability.
What it does illustrate is the speed of Shah’s rise. MD at 27. Partner at 31. Co-head of FICC at 41. The rough edges that get sanded off through decades of management training simply have not had enough time to disappear.
For the record: Goldman’s own private credit exposure is material. The irony of using a geopolitical crisis as a distraction from private credit marks was not subtle.
