Apollo, Ares, and BlackRock are capping withdrawals from private credit funds, with Apollo returning only 45% of requested draws. Morgan Stanley forecasts an 8% default rate, a sharp reversal for an asset class that promised low volatility and principal protection.
Chapters
There are seemingly some huge problems in private credit. This has been boiling for months, but Apollo today says they're only giving back 45% of requested draws from one of their $15 billion private credit funds. Also on the heels is Ares has done the same thing as capping withdrawals of their private credit fund. And also BlackRock, the largest asset manager on Earth, is doing the exact same thing. And Morgan Stanley saying here they think it's going to hit 8% of private credit defaults. Private credit was the Poster child just a few years ago. I mean, everyone was plowing huge amounts of money. We went to the Greenwich Economic Forum out in New York and Connecticut, and it was for a full day. Private credit was the thing. Ray Dalio was there talking private credit. I mean, all of them. And now we are seeing this huge rotation out of private credit. Now, if you didn't catch what this means, if you put in $1 million into this, you would only get back $450,000. That's what— then they're capping the request amounts. That's what's happening because of this. That's on a $15 billion private credit fund. The number one rule of lending is give me my money back. Give me the principal back. This is a principal protection play. This is usually very, very safe funds. Now, if you were in crypto or venture, okay, you can see volatility like this. But in private credit, man, crazy times. Maybe it's a great buying opportunity. Who knows? Comment down below what you're seeing, but follow along to stay in the loop. I'll make some more videos.
