The Smart Money Is Paying Attention to ‘Idiot Lights’: Banking Monitor

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My car reminds me of private credit because the check-engine light comes on sometimes for no discernable reason. I’m pretty handy, so I fix the problem with black electrical tape. I stick it directly over the annoying warning until it goes away and keep driving, probably validating those who call it an “idiot light.” I’m told this behavior is not unique to me, but it’s likely not the best way to handle the warning lights flashing for private credit. Unlike my feckless denialism, there are signs that some of the finance world’s big drivers are ready to pull over and figure out whether it’s the trouble light or the industry’s engine that’s malfunctioning.

Apollo Global Management will bring some clarity by reporting net asset values of its credit funds on a monthly basis, with plans to eventually do it daily. JPMorgan Chase, whose boss famously warned of “cockroaches” in the industry’s richly paneled woodwork, is restricting some lending to private credit funds and insisting on some markdowns. Boaz Weinstein, who bet against JPMorgan in the infamous London Whale era, argues in contrast that some of the discounts on private assets are overdone and he’s “buying pessimism” from investors unhappy with Blue Owl Capital’s offerings. The latter firm, which remains a primary target of bets on a private-credit reckoning, defended its recent transactions.