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Goldman Sachs and JPMorgan Chase are giving hedge fund clients ways to bet against the private credit market.
According to a Bloomberg report, both firms have created baskets of listed companies tied to private credit. JPMorgan’s basket focuses on alternative managers and BDCs.
“This, from Bloomberg, is not good news for a market segment that is already challenged to separate signal from noise, let alone properly differentiate among funds/firms in this space,” economist Mohamed A. El-Erian wrote.
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The instruments arrive as the $1.8 trillion private credit market faces a severe stress test. BlackRock’s $26 billion HPS Corporate Lending Fund capped withdrawals in early March amid rising redemption requests.
Blue Owl Capital also permanently halted quarterly redemptions from one of its retail-focused funds. Investor anxiety centers on lenders’ heavy exposure to software companies, a sector now under pressure from AI advances.
El-Erian earlier questioned whether these stress signals represent an early warning moment similar to August 2007. The creation of “shorting” tools amplifies those concerns. According to ZeroHedge,
“While subprime was the crisis catalyst in 2008, this time around almost everyone agrees that ground zero of the next credit crisis will be the $1.8 trillion private credit market.”
For crypto markets, the private credit fallout remains a key variable. If stress triggers broader deleveraging, liquid assets like BTC could face selling pressure.
However, if the crisis forces central banks to ease monetary policy, Bitcoin’s macro thesis as a hedge against currency debasement could strengthen.
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