HLEND says its loans are primarily to mature private companies with stable cash flows, and structured to be paid back first if the borrower goes bankrupt. It pays dividends monthly.
According to company documents, 19% of HLEND's portfolio is tied up in software, a sector that has faced aggressive selling as investors fear disruption from AI-first startups.
Investors are also rushing to safe havens as markets reel with heightened volatility this year, amid mounting concerns of an economic slowdown from a prolonged conflict in the Middle East, AI-fueled disruptions and loan defaults.
Buy physical AI companies such as Nvidia, CPU makers, TSMC, memory makers, etc. It's hard to know how software companies will perform in the future if software is so cheap to make. The competition will be brutal.
Perhaps if an ETF holds similar underlying instruments. It is unlikely this impacts Blackrock more broadly or other unrelated ETFs.
Stepping back, the idea with private credit was to move a lot of lending and credit risk taking away from the banks. Because if the bank fails, then it causes risk to the financial system. If a private credit fund does badly, you have sad investors. But the broader financial system is not imperiled.
And there will always be periods where credit does badly. It is the nature of these markets and lending.
TBC, I think the private credit guys got over their skis over the last 5 years and we'll see some sad investors in the next few years.
Is it possible we see this spreading to ishares products?
Perhaps if an ETF holds similar underlying instruments. It is unlikely this impacts Blackrock more broadly or other unrelated ETFs.
Stepping back, the idea with private credit was to move a lot of lending and credit risk taking away from the banks. Because if the bank fails, then it causes risk to the financial system. If a private credit fund does badly, you have sad investors. But the broader financial system is not imperiled.
And there will always be periods where credit does badly. It is the nature of these markets and lending.
TBC, I think the private credit guys got over their skis over the last 5 years and we'll see some sad investors in the next few years.
If any contagion, I would expect first to spread to private equity.