Private Debt News Weekly Issue #40: Banks Go Big, Private Credit ETFs Emerge, and Valuation Risks Mount
JPMorgan’s $50 Billion Lending Push, Apollo’s $35 Billion Meta Deal, and Scrutiny Over Private Credit Valuations Intensify
The convergence of public and private credit markets is accelerating, as JPMorgan pours $50 billion into direct lending, State Street and Apollo launch a private credit ETF, and BlackRock bets on private market indexation. Meanwhile, valuation concerns grow, with regulators scrutinizing private credit funds after the Zips Car Wash bankruptcy exposed discrepancies in loan pricing.
With banks, private lenders, and asset managers fighting for dominance, private credit is transforming at an unprecedented pace. Here’s your deep dive into this week’s most pressing developments shaping the $1.6 trillion industry.
Key Market Trends
JPMorgan’s $50 Billion Private Credit Expansion
JPMorgan is dramatically ramping up its direct lending platform, setting aside $50 billion to compete directly with Apollo, Blackstone, and Ares in private credit.
The Numbers:
JPMorgan has deployed $10 billion in private credit since 2021.
Its co-lending partners have allocated an additional $15 billion.
New deals range from $50 million to $4.5 billion in size.
Why It Matters:
Banks are no longer ceding private credit to asset managers and are becoming direct competitors.
JPMorgan’s expansion signals a new era of bank-led private credit, leveraging deep client relationships and balance sheet strength.
State Street and Apollo Push Private Credit ETF Despite SEC Concerns
State Street and Apollo launched the first-ever private credit ETF (ticker: PRIV), aiming to bring direct lending exposure to retail investors.
Key Issues:
The SEC raised concerns over the fund’s liquidity and Apollo’s role, forcing a name change and structural adjustments.
The ETF is capped at 15% illiquid holdings, with a target private credit allocation of 10% to 35%.
Apollo is required to provide only three bids per day to ensure pricing transparency.
What’s Next?
If successful, this could open the floodgates for more private credit ETFs, democratizing access to the asset class.
Regulatory scrutiny remains high, with liquidity risks under close watch.
BlackRock’s Larry Fink Wants to "Index" Private Markets
BlackRock is making a massive push into private markets, spending $30 billion on acquisitions, including private credit and infrastructure firms.
Key Takeaways:
BlackRock aims to create indexes for private markets, similar to public ETFs.
Fink sees Preqin (BlackRock’s new $3.2 billion data acquisition) as the key to unlocking private market transparency.
The move could transform portfolio diversification, allowing investors to blend public and private assets seamlessly.
The Big Question:
Will private credit transparency improve, or will increased scrutiny expose valuation risks?
Private Credit Valuation Scandal Grows After Zips Car Wash Collapse
Zips Car Wash filed for bankruptcy just months after private credit lenders marked its $654 million loan at 93-95 cents on the dollar.
The Problem:
Fund managers’ discretion in pricing loans led to misleading valuations that did not reflect the company’s worsening financials.
Investors were not informed about the firm’s liquidity crisis, highlighting the opacity of private credit marks.
What’s Next?
Regulators are likely to push for real-time pricing standards, making it harder for private lenders to smooth out volatility artificially.
Recent Deals
Apollo, KKR in Talks for $35 Billion Meta Data Center Financing
Apollo is leading a massive $35 billion financing for Meta’s U.S. data center expansion.
Why This is Huge:
Meta’s AI infrastructure push requires long-term financing, and private credit is stepping in where banks traditionally dominated.
The deal signals growing institutional appetite for investment-grade private credit transactions.
JPMorgan, Citigroup, and Goldman Sachs Continue Private Credit Push
The blurring of bank and private credit lines continues as investment banks grow their direct lending arms.
Recent Moves:
JPMorgan launched a co-lending program with FS Investments, Cliffwater, and Soros Fund Management.
Citigroup and Apollo announced a $25 billion private credit partnership.
Wells Fargo expanded its $5 billion direct-lending platform with Centerbridge Partners.
South Africa’s PIC Eyes Private Credit Expansion in Africa
South Africa’s largest money manager is ramping up its private credit exposure, deploying 8 billion rand ($425 million) into Africa over two years.
Why It’s Significant:
African markets have high demand for infrastructure and corporate lending, and private credit offers a scalable alternative to traditional bank lending.
The PIC is looking to expand partnerships with global investors, increasing institutional capital flow into African private markets.
Forward Outlook
Banks vs. Private Credit Firms: The Battle Intensifies
JPMorgan’s $50 billion push signals that banks aren’t ceding private credit to asset managers without a fight.
More bank-led private credit partnerships will emerge in the coming months.
Retail Investors Gain Access to Private Credit
The State Street-Apollo ETF is the first step, but regulatory hurdles remain.
If successful, expect more ETFs and interval funds targeting retail investors.
Valuation Transparency Becomes a Major Issue
The Zips Car Wash collapse highlights the risk of discretionary loan pricing.
More regulatory pressure is coming, with potential new disclosure requirements.
Private Credit Expands into Large-Scale Infrastructure Deals
Meta’s $35 billion financing package is just the beginning.
Private credit is becoming the go-to solution for large-scale corporate funding needs.
Global Expansion of Private Credit Accelerates
Africa, Asia, and emerging markets are becoming high-growth areas for private debt investment.
More institutional capital is shifting to high-yield private debt markets globally.
Final Takeaway
The private credit market is evolving at breakneck speed—banks are aggressively expanding, retail investors are gaining access, and valuation scrutiny is increasing. Mega-deals like Meta’s $35 billion financing and JPMorgan’s $50 billion push highlight how private credit is no longer just an alternative asset—it’s becoming a mainstream force in global finance.
Stay ahead with Private Debt News Weekly—your go-to source for insights, deals, and trends shaping private credit.