"In the great scheme of things, private credit probably does not present a systemic risk. This is because credit standards have been modestly weakening pretty much across the board."
"Fears that artificial intelligence could erode the earnings power of software companies and weaken their ability to repay loans are rippling through the private credit industry."
"By and large, private credit does not tend to have great transparency or rigorous valuation 'marks' of their loans - this increases the chance that people will sell if they think the environment will get worse."
The leveraged private credit market is valued at $1.8 trillion, while investment-grade bonds and residential mortgage securities each total $13 trillion. Dimon stated that private credit likely does not pose a systemic risk. Goldman Sachs reported low repurchase requests, indicating investor confidence. However, concerns about artificial intelligence affecting software company earnings are causing investors to reevaluate risks in private credit. Dimon warned of potential higher losses in leveraged lending due to weakening credit standards and lack of transparency in private credit valuations.
Read at Axios
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