Private Credit’s Fault Lines Risk Deepening
The Iran war may not last long enough to hurt the broader economy but it could be enough to expose weaknesses in an industry that’s already vulnerable.
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The war in Iran has abruptly raised the stakes for global debt markets, reviving inflation fears that investors had largely pushed aside. It also threatens to deepen existing market fragilities, with private credit standing out as a likely casualty in a broad flight to safety.
Blue Owl Capital has been the poster child for private market vulnerability because of fears AI would disrupt the software sector where it has invested heavily. As investors stormed the exits, the direct lending specialist decided to sell assets to cap redemptions while its shares had the worst month ever.