Several large hedge funds warned private credit risks are increasing. Davidson
Kempner Capital Management CIO Tony Yoseloff said private credit faces more
severe problems than public markets amid higher rates, slower corporate growth
and large debt maturities in 2027–28. He noted about one-third of recent
private-credit loans have followed private equity into the software sector,
calling it “a software problem, an interest-rate problem, and above all an
overvaluation problem.” John Elwood, CIO at Sona Asset Management, said the
cumulative default rate in the broad syndicated-loan market over the past five
years has already exceeded 2008 global financial crisis levels and that private
credit shares many of the same arrangers, borrowers and alternative credit
managers but typically involve smaller, inherently riskier borrowers.
