Displaying items by tag: private credit

Private credit firms are increasingly shifting from traditional cash-flow lending toward asset-backed finance using collateral that now includes intellectual property, data centers, and energy infrastructure. 

Despite the US ABF market totaling $5.5 trillion, private credit holds only a small share and is partnering more frequently with banks to expand. The recent bankruptcy of First Brands has raised concerns about how well lenders understand the risks in ABF, especially as more unfamiliar assets require precise valuation in a downturn. 

Demand for digital and energy infrastructure is driving ABF growth, with data center financing alone expected to jump sharply by 2028. Yet the sector has not been tested under high interest rates or recessionary conditions, prompting warnings from regulators about potential systemic risks. 

Finsum: Look for asset return correlation in stress scenario to test your demand for private markets.

Coinbase Asset Management and Apollo have partnered to launch tokenized credit products, combining Apollo’s private credit expertise with Coinbase’s blockchain infrastructure to introduce new stablecoin-backed strategies in 2026. Their initiatives follow the GENIUS Act, which established the first U.S. federal framework for stablecoins and is expected to drive the market to $3 trillion by 2030. 

Meanwhile, fund managers such as Hamilton Lane and Laser Digital have begun tokenizing credit funds via KAIO, a protocol purpose-built for institutional-grade onchain assets, with over $200 million already tokenized. KAIO, backed by Nomura, recently integrated with the Sei blockchain to provide fast, compliant access to funds like Hamilton Lane’s senior credit platform and BlackRock’s ICS US Dollar Liquidity Fund. 

In a related move, Securitize announced plans to go public through a merger with Cantor Equity Partners II, valuing the company at $1.25 billion and positioning it at the forefront of a $19 trillion market for real-world asset tokenization.

Finsum: Demand for tokenized assets is rising sharply, with Broadridge reporting that while only 15% of asset managers currently offer tokenized funds, 41% plan to do so soon.

Blackstone’s flagship private credit fund, BCRED, is issuing $500 million of five-year investment-grade bonds, expected to yield about 1.6 percentage points above Treasuries. 

The sale comes after BCRED’s $1 billion issuance in January and follows a $650 million note deal from Ares Management’s BDC earlier this week. Goldman Sachs’s BDC is also preparing a potential offering as business development companies take advantage of renewed investor demand. 

These firms, which lend to small and midsize companies, are tapping the market before earnings blackout periods begin. Issuance overall has surged, with 27 companies selling $43 billion of debt Tuesday, the third-largest daily volume on record. Barclays, Citigroup, Goldman Sachs, RBC, and Wells Fargo are managing the deal, with proceeds earmarked for general corporate purposes.

Finsum: The timing of this private credit move is worth monitoring, as it could have implication for earnings season. 

UBS strategists have warned that the artificial intelligence boom, fueled heavily by private credit firms and lenders, is raising the risk of overheating in the sector. Private credit, once focused on smaller businesses, has expanded rapidly into big tech, with tech-sector debt from non-bank lenders surging nearly 29%—or $100 billion—in the past year. 

The warning echoes concerns from OpenAI CEO Sam Altman, who recently cautioned that excitement around AI may be inflating a bubble. UBS noted that while this influx of capital could support hyperscaler growth plans, it may also create vulnerabilities if assets sour or growth slows. 

Tech giants including Meta, Amazon, Microsoft, and Alphabet are projected to spend $344 billion in 2025, much of it on AI-driven infrastructure such as data centers. 

Finsum: With private credit now deeply embedded in the sector, analysts caution that investors should carefully monitor risks alongside the sector’s breakneck growth.

Private credit has grown so large and intertwined with banks and insurers that it now poses a systemic risk in future financial crises, according to a new Moody’s Analytics study co-authored by economists and regulators. 

The report warns that the opaque nature of private credit and its deepening ties to traditional finance could amplify financial shocks due to increased interconnectedness. Since the 2008 crisis, banks have reduced lending amid tighter regulations, creating room for private credit funds—often lending to riskier, heavily indebted companies—to flourish with less oversight. 

Researchers used business development companies as a proxy for the sector and found their market behavior is now more correlated with broader financial stress than in the past. Although private credit firms argue they are less prone to panics due to their long-term investor base, banks are still deeply exposed through indirect relationships like fund financing and risk transfers. 

Finsum: While private markets tend to be insulated from recessions compared to their public counter parts it’s important to keep this risk in mind when investing