Big Banks Turn Up Pressure on Private Credit
Wall Street is adding to the stress on managers already reeling from an exodus of investors.
For years, Wall Street banks eagerly assisted private credit funds looking to amplify their investing firepower with hundreds of billions of dollars in loans. This in turn helped those funds notch ever-higher returns. Now, those same banks are tightening their arrangements, adding to the pressure on managers already reeling from an exodus of investors.
Some big banks are raising interest rates for the leverage they provide, and they’re also marking down specific loans posted as collateral. Behind the scenes, that’s prompting private credit fund managers to swap out holdings from the pools as banks including JPMorgan, Goldman Sachs and Barclays exercise their right to write down individual assets.