It looks like non-bank lenders are in the process of slowly collapsing.
Seems a lot like 2009. Things move slowly, and then all at once.
Private credit is showing increasing signs of stress, despite comments to the contrary from some of the largest fund managers that are trying to put a year of turmoil behind them.
Recent quarterly reports from funds overseen by the industry’s big players showed that loan health and investor returns are worsening, according to an analysis by The Wall Street Journal.
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The percentage of defaulted loans in Blue Owl’s fund hit 2.8% in the second quarter, its highest level in at least five years. Nonperforming loans at the three other funds also hit five-year highs, exceeding levels reached in 2023 when the Federal Reserve hiked interest rates, squeezing the finances of corporate borrowers and triggering a wide stock and bond market selloff.
Not only have the lessons of 1929 been forgotten, the lessons of 2009 have been forgotten.
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