When does the private credit crisis go public?
The private credit crisis has gone mainstream. Private credit defaults hit a record 9.2% in 2025. At the same time, we’re seeing investors attempt to withdraw their money from private credit funds like BlackRock, Morgan Stanley, and Blue Owl Capital at a record pace—essentially a bank run on private credit lenders.
For example, Blue Owl Capital has seen redemption requests of 20–40% for its private credit funds. At the same time, its shares are down 43% year-to-date (slide 3). That’s not good.
The thing about private credit is that banks (public credit) are heavily exposed. As you can see in the first slide, large banks like Wells Fargo and Bank of America are heavily invested in private credit—they’ve lent tens of billions of dollars to these funds. When private credit takes a hit, public credit does too.
At the same time, we know banks are sitting on over $300 billion in unrealized losses (slide 2). With a weakening job market, housing market, and commercial real estate market, it’s likely banks will take losses in other areas alongside private credit.
The signs have never been clearer…
A bank crisis is coming.
#PrivateCredit #bankingcrisis #CreditMarkets#FinancialCrisis #learnaboutbit
