U.S. banks are tightening lending conditions and increasing borrowing costs for private credit funds. This shift stems from growing concerns over asset valuations, specifically within the software sector.
Banks have become a primary funding source for the less-regulated private lending market following a period of rapid growth. This interconnection creates significant potential for risk spillover into the broader banking system.
JPMorgan Chase reportedly marked down the value of loans backing these funds and restricted new lending. Recent collapses of private credit borrowers have already impacted lenders including Wells Fargo and Barclays.
Major firms Apollo and Ares Management have limited investor withdrawals due to liquidity mismatches. These developments are drawing increased scrutiny from financial regulators.