AI disruption triggers private credit run
The guest argued that the collapse of software valuations is exposing severe vulnerabilities in private credit funds, triggering a retail run as investors rush to redeem capital.
The argument
The guest explained that many private credit funds allocated 13% to 25% of their portfolios to technology and software. As AI disrupts these sectors, defaults and rapid asset write-downs (including a BlackRock private credit bond marked from par to zero) are forcing major players like Blue Owl and Blackstone to manage heavy redemption pressures.
The thesis, stress-tested
✓ What validates it
- ✓Further emergency capital injections by fund partners to meet redemptions
- ✓An increase in the frequency of private credit assets being written down to zero
- ✓Rising default rates among software and technology borrowers within these credit portfolios
▸ Risks discussed
- ▸Illiquidity gates and redemption limits may trap retail investors
- ▸Potential for hidden fraud to emerge as liquidity dries up
- ▸Lack of mark-to-market transparency masks the true extent of portfolio losses
Hear it yourself
"And when software collapsed and people realize that anywhere from 13 to 25% in some of these funds was in technology slash software, well, then those bonds go down and then people want their money back."
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