Episode summary

How the Private Credit Crunch Is Raising New Questions About Risk

Wall Street Week · Mar 15, 2026 · 11 min · Guests: Marc Rowan, Lloyd Blankfein, Daniel Tarullo

Summary

Private credit is under heavier scrutiny after recent trouble with fund redemptions and a selloff in related public stocks such as KKR, Blue Owl, and Apollo. The host frames the selloff as an early sign of stress and notes that the industry’s rapid growth has pushed its risks into public view.

The episode weighs two competing views. One side argues private credit has filled a real financing gap left by banks, can offer higher income than public fixed income, and has so far shown lower-than-expected defaults. Pension allocators say the asset class can still fit in large, diversified portfolios, especially when run by specialized managers.

The cautionary view centers on illiquidity, opaque valuations, indirect bank exposure, and the move into retail products. A former regulator warns that the bigger concern may be macroeconomic if leverage builds up across borrowers, investors, and funds, and if inflows dry up. The episode concludes that private credit may be suitable for institutions but potentially dangerous when sold to retail investors who expect easy access to cash.

Key takeaways

The host says recent redemption trouble and stock weakness are the first visible signs of stress in private credit funds.
A pension investor argues private credit can still absorb growth and expects long-term returns of 7, 8, 9 percent.
The former regulator says the industry is on "yellow alert," not "red alert," because opacity and indirect bank exposure deserve closer scrutiny.
A private credit executive argues the strategy is de-risking for individuals because first-lien debt sits senior to equity.
The former regulator says the bigger risk may be macroeconomic leverage, especially if funding into private credit dries up.

How the episode opens

In recent days, the shine on private credit has come off after some people have had trouble getting their money out. -Shares of KKR and Blue Owl were down as much as 10 percent yesterday. -I think we're seeing the first sign of stress around these funds. Westin: Although the lending is private, concerns about the industry have made their way into public markets, with shares of Blue Owl, Apollo and others under pressure. -I get nervous any time any particular strategy gets a little bit crowded. Westin: Andrew Junkin invests in private credit as chief investment officer for the Virginia retirement system. He oversees pension assets for 230,000 Virginia public employees and allocates about 16 percent of their $130 billion to private credit. -I think the capacity for the private credit markets to absorb the growth that has happened and that is forecasted to continue to happen is probably pretty solid. It's not the highest expected return asset class that we have that would probably be private equity, but it is higher than public fixed income, which for us is really investment grade. I mean, that's kind of the sleep at night, treasuries, agencies, investment grade, corporate portfolio. Private credit has a little bit more credit risk in it, of course, but the yield is higher and we're expecting returns kind of in the 7, 8, 9 percent over the long term. Right now, we do think that private credit has expected returns that are a little bit higher, which is one of the reasons in the short term we've been sort of increasing our allocation. Westin: Marcie Frost is CEO of Calpers, the largest public pension fund in the United States. -You know, on the private credit side, we've been very specialized and working only with high quality…

From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →

Topics

private credit crunch
risk management
non-bank lending
retail investor exposure
credit market vulnerabilities

Companies and tickers mentioned

APO
GS
Apollo Global Management
Goldman Sachs

Watch the episode

Watch “How the Private Credit Crunch Is Raising New Questions About Risk” on YouTube

Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.

How the Private Credit Crunch Is Raising New Questions About Risk

Summary

Key takeaways

How the episode opens

Topics

Companies and tickers mentioned

Watch the episode

More from Wall Street Week

Prediction Markets

Public Markets

Developers

Company