Private Debt News Weekly Issue #56: Meta’s Megadeal, ETF Cracks, and the Pushback on Liquidity
The system keeps expanding, but private credit’s quiet fragilities are getting harder to ignore
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Welcome back to Private Debt News Weekly, where big deals keep coming—but the system beneath them is creaking louder.
This week, Meta is preparing to raise up to $29 billion in one of the largest private financings ever, turning to Apollo, KKR, Brookfield, Carlyle, and Pimco to fund its AI data center buildout. That structure—off-balance-sheet, equity + debt, and potentially tradable—is the new blueprint for how corporates tap private capital without hurting their ratings.
Meanwhile, State Street’s troubled private credit ETF finally saw its first inflows in two months—but it may be too late. Regulators remain concerned about valuation rules and liquidity mismatch, and market watchers are starting to sound the alarm on something bigger: valuation contagion.
JPMorgan’s effort to trade private loans is flopping, with zero major managers willing to sell. And across the market, insurance allocations are rising—but so are the warnings from firms like Brookfield and JPMorgan Asset Management that the trade is overcrowded.
Key Market Themes
1. Meta Is About to Reset the Scale
Meta is preparing to raise up to $29B—$3B in equity and $26B in debt—from a syndicate of private capital firms to fund its U.S. data center expansion.
The structure will likely be off-balance-sheet, potentially tradeable, and designed to minimize rating impact while delivering sponsors long-term yield and income rights.
Why It Matters:
This is private credit’s next frontier: financing trillion-dollar corporate capex the banks won’t touch. The scale is new. The structure isn’t. And everyone—from Meta to OpenAI—is coming for more.
2. ETF Cracks Are Becoming Systemic
After months of stagnation, State Street’s public-private credit ETF (PRIV) saw its first inflows since April. But SEC concerns remain unresolved: valuation opacity, Apollo’s ambiguous role, and structural liquidity mismatch.
And in a blistering essay this week, Stanford’s Amit Seru warned that private credit ETFs could create the next credibility crisis: when NAVs based on “models” diverge too far from reality, the whole funding system wobbles.
Takeaway:
Private credit’s risk isn’t default. It’s that the illusion of stability only works until someone tries to sell. And the ETF wrapper is how that illusion breaks.
3. No One Wants JPMorgan’s Private Loan Market
JPMorgan’s attempt to trade private credit loans has hit a wall—most major lenders refuse to participate. Trades are limited, sponsors are blocking transfers, and managers don’t want markdowns on paper they still own.
The bank’s April list of 30+ names generated just $3.3 million in actual offers. Most firms said they’ve never and will never sell to JPMorgan.
Why It Matters:
If the debt can’t trade, it can’t be priced. And if it can’t be priced, it can’t be scaled through liquidity vehicles. The longer the private credit industry resists secondary markets, the more it reinforces that its NAVs are mark-to-model—not mark-to-market.
4. Insurance Capital Keeps Coming—For Now
US insurers now allocate close to one-third of their $5.6 trillion to private credit, up from 22% a decade ago. And 58% of insurers plan to increase exposure again this year.
But this comes as yields compress and top buyers like Brookfield begin pulling back. Even JPMorgan Asset’s CEO says he’d now favor junk bonds over private loans.
Signal to Watch:
Insurance is still buying—but it’s no longer doing it blindly. As more PIK-heavy portfolios emerge and documentation weakens, CIOs are starting to ask tougher questions about downside risk.
5. The Bank Comeback Is Real
After a volatile spring, debt markets are reopening—and banks are starting to claw back dealflow. KnowBe4, CFC, and Trucordia have all refinanced private credit deals into cheaper syndicated loans.
JPMorgan recently underwrote a $1.27B deal that priced 120 bps inside the private debt it replaced. The math is shifting fast.
The Flip:
Private credit still wins on flexibility. But when banks are pricing tighter and moving faster, sponsors start listening. Expect share to swing back toward syndicated desks in H2.
Deals of Note
Meta is preparing to raise $29B in AI data center financing, with private debt and equity from top managers.
Trucordia closed a $2B syndicated refi that replaced direct loans from Blue Owl and others.
Affirm received $500M from Prudential’s PGIM to fund $3B of buy-now-pay-later originations.
Citigroup is marketing an $8B SRT tied to corporate loans, freeing up capital amid credit worries.
Flowdesk secured $100M in digital asset credit from Two Prime Lending, as crypto credit reemerges.
Forward Outlook
ETF risk is no longer hypothetical. If NAV credibility slips, the whole ecosystem gets stress-tested.
Insurer allocations will rise—but CIOs are becoming more valuation-sensitive and less yield-driven.
Syndicated loans are back—and private credit pricing will need to adjust.
Private markets love scale—but Meta’s megadeal will test just how much liquidity really exists.
NAV marks, secondary liquidity, and fund structure alignment will be the battlegrounds of 2025.
Final Takeaway
Private credit keeps growing—but the assumptions holding it together are under pressure.
If the market can’t trade, it can’t price. If it can’t price, it can’t support liquidity structures. And if ETFs break, NAV credibility goes with them.
Meta’s megadeal is the biggest yet—but it won’t matter if the ecosystem behind it can’t evolve.
The debt may be private. But the consequences won’t be. Stay sharp.