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― Mark Twain
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Decline of Private Credit
JPMorgan Chase has reduced the value of certain loans to private credit funds, particularly those linked to software companies, after reviewing risks from market turmoil and potential disruption from artificial intelligence. The bank’s re-marking reflects the deteriorating credit quality in the $2 trillion private credit industry but is not considered significant. Private credit, which involves loans by non-bank lenders to riskier borrowers, has faced investor withdrawals and valuation concerns, with firms like BlackRock and Blackstone limiting redemptions amid fears of defaults. JPMorgan CEO Jamie Dimon said the bank is exercising greater caution in lending against software assets.
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We have long warned that the EAC cycle changes in 2026. Please watch the Economy & Stock Report updates for further ongoing discussions.
When JPMorgan marked down collateral and reduced available credit for their private credit clients, it effectively reversed a key driver of money creation.
Other banks will follow by tightening credit and setting off a slow-moving ripple throughout the financial system. That is, unless something balances the decline. Anyone watching the E&S Report knows better.
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