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What does this typically look like? Who is the intermediary here between the bank and corporate borrowers - are these buy side created SPVs?

JumpCrisscross 8mo ago
> Who is the intermediary Business development companies [0]. Blue Owl. BlackRock [1]. > are these buy side created SPVs? Great question! Not always [2]. [0] https://www.reuters.com/business/finance/private-credit-funds-slide-investors-sell-out-2026-03-12/ https://www.reuters.com/business/finance/private-credit-fund... [1] https://www.blackrock.com/corporate/newsroom/press-releases/article/corporate-one/press-releases/blackrock-acquires-hps-investment-partners https://www.blackrock.com/corporate/newsroom/press-releases/... [2] https://www.datacenterdynamics.com/en/news/meta-secures-30bn-blue-owl-finance-package-for-louisiana-data-center-report/ https://www.datacenterdynamics.com/en/news/meta-secures-30bn...
- vondur 8mo ago
  Am I wrong thinking this is similar to the housing loan crisis of 2008? This is just another form of that "shadow banking" system isn't it?
  - JumpCrisscross 8mo ago
    > This is just another form of that "shadow banking" system isn't it? Private-credit lenders are literally shadow banks [1]. But I'd be cautious about linking any shadow banking with crisis. Tons of useful finance occurs outside banks (and governments). One could argue a classic VC buying convertible debt met the definition. That said, the parallel to 2008 is this sector of shadow banking has a unique set of transmission channels to our banks. The unexpected one being purely psychological–when a bank-affiliated shadow bank gates redemptions, investors are punishing the bank per se. [1] https://en.wikipedia.org/wiki/Non-bank_financial_institution https://en.wikipedia.org/wiki/Non-bank_financial_institution
  - _heimdall 8mo ago
    You'll find plenty of talking heads on YouTube right noe claiming exactly this. Time will tell if private equity is actually wound up as tight as housing was in the GFC.
  - harmmonica 8mo ago
    I don't think you're wrong if the following holds true: Before the housing bubble burst, banks lent funds to countless borrowers who couldn't, ultimately, afford their mortgage payments (because the banks didn't do their due diligence when underwriting the loans). This was widespread across pretty much every bank and mortgage banker. Not sure of the actual percentage of borrowers who, when all was said and done, had no business getting a mortgage for a house or condo, but suffice it to say it was well into the double digits percentage-wise (there's much more to this than simply banks and borrowers with Wall St. playing a major role in the collapse, but just keeping things simple). In this private credit situation the analog for the banks are these private credit funds that have raised the capital they've lent from institutions and high-net-worth individuals (as opposed to banks, which have funds from consumer deposits). The analog to the individual mortgage borrowers from 2008 are actual companies. To connect the dots, if the private credit funds were like the banks pre-2008, where due diligence was an afterthought, then this could turn out to be similar. So the real question is: are the borrowers (businesses in this case) swimming naked? Or do you believe the private credit funds when they say they actually conducted a good amount of due diligence when extending their loans? Once you know the percent of the companies that are naked you can evaluate whether this could/would end up similar to 2008. Nobody knows that yet, even, I suspect, the private credit funds themselves.
    - paganel 8mo ago
      Even the best due diligence can't do anything if a crisis (not necessarily banking-related, a Middle East might just do the trick) starts manifesting itself and now many of those businesses have issues in paying down the debt they owe.
      - ambicapter 8mo ago
        "I did my due diligence but didn't anticipate these risks". Doesn't sound like due diligence to me. Not having a plan to unwind your position if SHTF doesn't sound like due diligence to me. You can argue it any way you like but it boils down to "The money was good and I didn't think the worst was gonna happen".

JumpCrisscross 8mo ago

> Who is the intermediary Business development companies [0]. Blue Owl. BlackRock [1]. > are these buy side created SPVs? Great question! Not always [2]. [0] https://www.reuters.com/business/finance/private-credit-funds-slide-investors-sell-out-2026-03-12/ https://www.reuters.com/business/finance/private-credit-fund... [1] https://www.blackrock.com/corporate/newsroom/press-releases/article/corporate-one/press-releases/blackrock-acquires-hps-investment-partners https://www.blackrock.com/corporate/newsroom/press-releases/... [2] https://www.datacenterdynamics.com/en/news/meta-secures-30bn-blue-owl-finance-package-for-louisiana-data-center-report/ https://www.datacenterdynamics.com/en/news/meta-secures-30bn...

vondur 8mo ago
Am I wrong thinking this is similar to the housing loan crisis of 2008? This is just another form of that "shadow banking" system isn't it?
- JumpCrisscross 8mo ago
  > This is just another form of that "shadow banking" system isn't it? Private-credit lenders are literally shadow banks [1]. But I'd be cautious about linking any shadow banking with crisis. Tons of useful finance occurs outside banks (and governments). One could argue a classic VC buying convertible debt met the definition. That said, the parallel to 2008 is this sector of shadow banking has a unique set of transmission channels to our banks. The unexpected one being purely psychological–when a bank-affiliated shadow bank gates redemptions, investors are punishing the bank per se. [1] https://en.wikipedia.org/wiki/Non-bank_financial_institution https://en.wikipedia.org/wiki/Non-bank_financial_institution
- _heimdall 8mo ago
  You'll find plenty of talking heads on YouTube right noe claiming exactly this. Time will tell if private equity is actually wound up as tight as housing was in the GFC.
- harmmonica 8mo ago
  I don't think you're wrong if the following holds true: Before the housing bubble burst, banks lent funds to countless borrowers who couldn't, ultimately, afford their mortgage payments (because the banks didn't do their due diligence when underwriting the loans). This was widespread across pretty much every bank and mortgage banker. Not sure of the actual percentage of borrowers who, when all was said and done, had no business getting a mortgage for a house or condo, but suffice it to say it was well into the double digits percentage-wise (there's much more to this than simply banks and borrowers with Wall St. playing a major role in the collapse, but just keeping things simple). In this private credit situation the analog for the banks are these private credit funds that have raised the capital they've lent from institutions and high-net-worth individuals (as opposed to banks, which have funds from consumer deposits). The analog to the individual mortgage borrowers from 2008 are actual companies. To connect the dots, if the private credit funds were like the banks pre-2008, where due diligence was an afterthought, then this could turn out to be similar. So the real question is: are the borrowers (businesses in this case) swimming naked? Or do you believe the private credit funds when they say they actually conducted a good amount of due diligence when extending their loans? Once you know the percent of the companies that are naked you can evaluate whether this could/would end up similar to 2008. Nobody knows that yet, even, I suspect, the private credit funds themselves.
  - paganel 8mo ago
    Even the best due diligence can't do anything if a crisis (not necessarily banking-related, a Middle East might just do the trick) starts manifesting itself and now many of those businesses have issues in paying down the debt they owe.
    - ambicapter 8mo ago
      "I did my due diligence but didn't anticipate these risks". Doesn't sound like due diligence to me. Not having a plan to unwind your position if SHTF doesn't sound like due diligence to me. You can argue it any way you like but it boils down to "The money was good and I didn't think the worst was gonna happen".