The private credit industry is facing multiple headwinds, yet the entry of top-tier institutions is sending signals of confidence.
According to Bloomberg, Pacific Investment Management Company (Pimco) purchased all $400 million in bonds issued by Blue Owl Capital's private credit fund, OBDC, on Monday. Meanwhile, Goldman Sachs' private credit fund completed a $750 million bond issuance on Tuesday.
Daniel Ivascyn, Pimco's Chief Investment Officer, stated on Wednesday that private credit does not constitute a systemic risk, and he expects that as liquidity pressures intensify, more selling opportunities will emerge in the market, creating an ideal entry point for investors with robust balance sheets.
These transactions occurred against the backdrop of the private credit sector being mired in controversy. Concerns over the impact of artificial intelligence on software company valuations, record-high redemption demands, and questions regarding transparency have caused bond spreads for similar funds to widen to multi-year highs over recent weeks. Blue Owl, Ares Management, Apollo Global, and KKR have all imposed caps on redemption requests for their private credit funds.
<h2>Exclusive Purchase of Entire $400 Million Bond Issue Highlights Financing Pressures in Private Credit</h2>
According to Bloomberg, Pimco exclusively purchased the entire $400 million bond issuance from OBDC, managed by Blue Owl Capital, with Morgan Stanley acting as the lead underwriter. However, it remains uncertain whether Pimco intends to hold the bonds long-term—data from Trace indicates that at least one secondary market transaction exceeding $5 million has already occurred following the issuance.
In terms of pricing, the OBDC bonds mature in September 2028 with an issuance yield of 6.5%, approximately 2.7 percentage points higher than comparable U.S. Treasuries. According to Bloomberg calculations, this issuance yield carries a premium of about 0.2 percentage points over OBDC's existing debt, known as the &#34;new issuance concession,&#34; which is significantly higher than the average new issuance concession of 0.04 percentage points seen in the corporate bond market this year.
By comparison, the five-year bonds issued by Goldman Sachs' private credit fund on the same day had a new issuance concession of only 0.08 percentage points, narrowing by about 0.3 percentage points from the initial guidance range, and received a Baa3 rating from Moody's. The OBDC bonds received a Baa2 rating from Moody's and a BBB- rating from S&amp;P, both representing the lowest tier of investment grade.
<h2>Pimco: No Systemic Risk in Private Credit; Liquidity Pressures Will Create Entry Opportunities</h2>
Despite Pimco's purchase, its overall stance on private credit remains cautious. President Christian Stracke stated last month that the quality of loans sold in response to redemption pressures is concerning, leading Pimco to avoid such assets.
However, Chief Investment Officer Daniel Ivascyn made a clear statement on Wednesday in London that there is no systemic risk in private credit. &#34;What we are seeing is disappointment, returns below expectations, not systemic risk,&#34; he said.
Ivascyn also predicted that liquidity pressures would continue to drive asset sales throughout the year, presenting an excellent opportunity for investors with fresh balance sheets—including Pimco itself. He revealed that Pimco has already participated in relevant transactions and expects more forced sellers to emerge later this year. The appeal of these transactions lies in more favorable investor protection covenants and lower acquisition costs.
<h2>Wall Street: Private Credit Not a Systemic Bomb, But Pressures Likely to Persist Short-Term</h2>
Pimco is not the only institution holding this view. When asked during an analyst call whether private credit poses a systemic risk, JPMorgan Chase CEO Jamie Dimon stated directly: &#34;I do not believe it does.&#34;
Goldman Sachs multi-asset strategist Lotfi Karoui, speaking at the same event, noted that even if an economic downturn leads to rising default rates, the threshold for evolving into a threat to financial stability remains very high. He pointed out that the current environment is fundamentally different from 2008, when high leverage and asset-liability mismatches amplified shocks. &#34;Private credit is not a leveraged asset class,&#34; he said. &#34;In my view, the risk of borrowers deteriorating due to financial distress triggering a broad systemic shock is extremely low.&#34;
Earlier that day, Ares Management CEO also stated that private credit defaults are relatively manageable, and industry pressures primarily stem from liquidity and interest rate factors rather than credit fundamentals.
Currently, the private credit industry manages approximately $3.5 trillion in assets. Insufficient valuation transparency and liquidity mismatches remain the core contradictions attracting market attention. While statements and entries by top-tier institutions may help stabilize market sentiment, it remains to be seen whether redemption pressures can be substantially alleviated within the year.

BIZD

Amid intense scrutiny of the private credit sector, Pimco exclusively purchased all $400 million in bonds issued by Blue Owl Capital at a yield of 6.5%, with the new issuance concession significantly exceeding market averages. Pimco Chief Investment Officer Daniel Ivascyn stated that private credit does not pose systemic risk, noting that what is observed is merely disappointment and returns below expectations. He predicted that liquidity pressures will generate further selling opportunities, creating an ideal entry point for well-capitalized investors

- The private credit industry is currently facing multiple pressures, yet the entry of major firms is signaling confidence.  
- Notably, Pimco purchased $400 million in bonds from Blue Owl Capital, while Goldman Sachs completed an issuance of $750 million bonds, despite the market experiencing heightened liquidity stress and redemption requests.  
- Pimco's CIO stated that private credit does not pose systemic risks, and he anticipates more selling opportunities will arise, indicating potential for well-capitalized investors to benefit from the current market conditions.

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Blue Owl Capital

VanEck BDC Income ETF

Pro Gbl Listed Pvt

Simplify VettaFi Private Credit Stgy ETF

Goldman Sachs

ARES Management LP

Apollo Global

Morgan Stanley

Moodys

S&P Global

JPMorgan Chase

Blue Owl Capital III

Blue Owl Tech Finance

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ARES MANAGEMENT CORPORATION 6.75% MAN PFD CONV SER B

APOLLO GLOBAL MANAGEMENT INC 6.75% CONV PFD STK SER A

Apollo Global Management Pref Share APO 7.625 09/15/53

KKR Group Fin Co IX LLC Pref Share KKRS 4.625 04/01/61

KKR & CO INC 6.25% MAND CONV PREF SHARES SER D

KKR & Co. Inc.

MORGAN STANLEY DEP SHS EA REP 1/1000 SHS NON CUM PFD O

MORGAN STANLEY DEP SHS REPSTG 1/1000TH PFD SER Q

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MORGAN STANLEY NON-CUM DEP SH REP 1/1000 PFD SER I

MORGAN STANLEY 4.875 DEP SHS REP 1/1000 NCUM PFD SR L

MORGAN STANLEY 6.5%DEP SHS REPSTG 1/1000 NON CUM SER P

MORGAN STANLEY DEP SHS REPS 1/1000 PFD SER 'A'

MORGAN STANLEY DEP SHS REPR 1/1000TH INT PFD SER 'F' FX

MORGAN STANLEY DEP SHS REP 1/1000 NON-CUM PFD STK SER K

JPMORGAN CHASE & CO. 4.20% DEP SHS REPSTG 1/400TH PFD SER MM

JPMORGAN CHASE & CO. 6%NON CUM DEP SHS REP 1/400TH PFD SER EE

JPMORGAN CHASE & CO. DEP REP 1/400TH (5.75% NON CUM PFD DD)

JPMORGAN CHASE & CO. 4.625% DEP SH RE 1/400TH INT NO CU PF LL

JPMorgan Chase & Co.

JPMORGAN CHASE & CO. 4.55% DEP SHS REPSTG 1/400TH PFD SER JJ

JPMORGAN CHASE & CO. 4.75 DEP SHS REP 1/400 NCUM PFD SR GG

Pimco Makes Major Purchase of Blue Owl Dollar Bonds, Says Private Credit 'Not a Systemic Risk'!