JPMorgan Chase & Co and Goldman Sachs Group Inc are offering hedge fund clients ways to take bearish positions on the $1.8tn private credit market, according to a report by Bloomberg citing unnamed sources familiar with the matter.
The banks have created baskets of publicly listed companies with exposure to private credit, allowing investors to effectively bet against the sector. Goldman’s indexes include European financial institutions with private credit exposure, business development companies, and other alternative managers, while JPMorgan’s basket focuses on alternatives managers and BDCs. Clients can also invest directly in these indices.
Bank of America Corp had previously offered a similar basket of European firms, including Partners Group Holding AG, Deutsche Bank AG, and Axa SA, but has since withdrawn the recommendation, according to reports.
The private credit market has come under pressure due to a wave of redemptions, partly fuelled by investor concerns over concentrated exposure to software companies – a sector facing disruption from artificial intelligence. In the US, where private credit funds have attracted significant retail inflows, firms including BlackRock Inc, Morgan Stanley, and Cliffwater have imposed redemption limits after demand exceeded thresholds.
