Private Credit

Discussion – Private Credit Troubles

What is Private Credit? Why is it cratering right now? And how does it compare to “Storehouse Lending” (also a type of private credit)?

We dive into it on the New Breed of Business…

We’re looking for connections to the banking system, and things that might, you know, result in contagion. We don’t see those right now… What we see is a correction … and certainly there’ll be people losing money and things like that, but it doesn’t seem to have the makings of a broader systemic event

Jerome Powell on Private Credit at Harvard, 3/30/26

But where there’s smoke is there fire?

Private Credit is a $2Tn global market where mostly non-bank institutional private investors provide private loans to less established small and mid-sized companies, both publicly traded and privately held. The problem is that many of these investors are now publicly traded companies, and they have also expanded their investor base to include individual “regular joe” investors through vehicles like 401k plans.Private Credit market is $2Tn which is similar in size to Crypto (also approx. $2Tn).

Background Reading: A.I. Bubble?

A credit collapse and liquidity risk are currently underway in the private credit markets as reflected in the above stock prices. One of the liquidity mismatches that has been created is in the greed of many asset managers developing retail products designed to increase capital inflows into private equity and credit alternative asset categories, the risk of redemptions was minimized. Now, they cannot match the withdrawal requests which creates a crisis of confidence. Such confidence can spill over in a contagion into a financial institution’s credit risk.

• Ares and Apollo…Ares and Apollo Bloomberg article (3/24/26)
• Private Credit Ares Apollo Bloomberg Video
• Blue Owl Reverses Course and Limits Redemptions (WSJ 4/2 article)

Recall Jamie Diamond’s “cockroaches” comment (where there’s one, there’s more) from late last year…https://newbreed.co/2025/11/19/a-i-bubble/ [scroll down to “Private Credit A.I. Lending Risk” section]. This “prophetic word” now coming to pass.

Here is what Jamie said in his recently released letter to JPM shareholders…

The leveraged private credit market totals $1.8 trillion. As a comparison, the U.S. high yield bond market totals $1.5 trillion, and the bank syndicated leveraged loan market totals $1.7 trillion. Taking a wider view, the total market size of investment grade bonds is $13 trillion. And the total market value of all residential mortgage securities and loans is also $13 trillion. In the great scheme of things, private credit probably does not present a systemic risk.

[A]ctual losses right now are… higher than they should be… if rates or credit spreads ever go up, the companies that borrowed will have to borrow at even higher rates, putting them under even greater stress… It has always been true that not everyone providing credit is necessarily good at it… We have not had a credit recession in a long time, and it seems that some people assume it will never happen… anything that gets sold to retail investors as opposed to institutional investors requires greater transparency, higher standards and fewer potential conflicts… Those who do not do this properly are likely to get into trouble.

Jamie Diamond in his 48 page 2005 letter to shareholders released 4/6/26

Remarkable Troy Black Prophetic Word

For we know partially and we prophesy partially, but when the perfect comes, the partial will pass away.

1 Corinthians 13:9

Here is a remarkable prophetic word fulfillment from Troy Black about Private Credit. “Lexington” Avenue – BlackRock, Blackstone, Blue Owl…all located in and around Park/Lex and 51st-53rd (345 Park and 375 Park Ave.).  Question is, has the “A financial giant is going to come to ruin” word come to pass yet?

Do not quench the Spirit. Do not despise prophetic utterances. Test everything; retain what is good.

1 Thessalonians 5:19-21

Interesting to note that Ares Capital is also located same neighborhood – back of Lexington & 46/47th – 245 Park Ave, New York, NY 10167. All of these offices are addressed on swanky “Park Ave”, yet what’s “behind” the scenes going on would be the back of the buildings on less well presented “Lexington Ave.”

Video Explaining Private Credit

Storehouse Lending

So given all this, what does God think? Has he revealed it in his word? We think so. Is there a better, Kingdom building alternative? Yes. That’s why we pursue the Storehouse Vision.