{"text":[[{"start":6,"text":"Almost a year ago, US companies First Brands and Tricolor filed for bankruptcy. The failures involved alleged fraud by previously rather obscure companies. But put together, they raised alarms about the highly interconnected web of private lending that had arisen in recent years. Investors, CEOs and policymakers began to warn about corporate debt stress and suggest this episode might be a canary in the coal mine for the roughly $2tn private credit industry, one of the fastest-growing areas of debt markets."}],[{"start":39.12,"text":"JPMorgan Chase CEO Jamie Dimon once remarked that “when you see one cockroach, there are probably more”. The Bank of England started to explore where the cracks are, and what might happen to the broader financial system if private credit were to suffer a serious widespread shock. A year later, some of the more apocalyptic predictions about horrors supposedly hiding within the market have so far proved ill-founded. But it is also now clear that late summer 2025 was not a blip. The gnawing concerns about private credit, especially in the form of so-called direct lending, are here to stay."}],[{"start":74.86,"text":"Private credit portfolios have experienced markdowns, outflows and defaults in recent months. Many parts of the market, such as so-called investment-grade asset-backed lending, appear resilient — but others do not. Direct lending, in which non-banks provide capital to businesses, faces strain. As the FT reported this week, the value of troubled loans held by some of the largest private debt investors has reached levels last seen in 2017."}],[{"start":101.96,"text":"Some on Wall Street characterise concerns over private credit markets as media hype, but the pockets of instability are real. Even some private lenders have themselves suggested in recent comments that cyclical dynamics may now be at play."}],[{"start":115.76,"text":"Private lending really blossomed several years ago, when interest rates were at record lows and stock markets were surging: private equity firms, which had traditionally leveraged their corporate investments with bank loans, found it cheap and easy to do so through the credit arms of their private capital cousins. This has raised concerns about risk concentration within firms. Circular ownership between firms can further amplify risk."}],[{"start":136.78,"text":"If there were a serious downturn, the question turns to who is on the hook. A fashion has emerged in recent years for private capital companies to buy or set up life assurance companies, with the premiums of everyday policyholders directed into private credit. A federal investigation into operations run by a pioneer of this structure, Mark Walter, has raised concerns about the scope for mismanagement or worse. Unlike banks, which must meet strict federal requirements on capital and reserves, US insurance companies are primarily overseen by state regulators."}],[{"start":170.84,"text":"Appetite for some private credit assets appears to be slowing down. Blue Owl Capital’s flagship private credit arm reported its slowest pace of fundraising in three years this summer, following a period of heavy withdrawal requests for the firm. Ares Management scaled down a billion-dollar private credit continuation vehicle this month by more than half when investors pushed back on valuations. Macro dynamics exacerbate this: a global “bond glut”, with heavy sovereign supply relative to demand, has put upward pressure on market interest rates and contributed to a recent bond sell-off."}],[{"start":206.32,"text":"Call them canaries or cockroaches, but the recent signs of stress among private credit operators should be a warning to investors and regulators alike to increase their vigilance."}],[{"start":216.72,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1787196609_6885.mp3"}