George Pearkes

it was, derp, yeah so that's fine then...expectations were much stronger than it ended up being.

oh was that published before 8:30? that would explain it.

Yeah that's an insane headline, no idea where they're getting that.

It's one thing to say "labor market stability likely continued continued" (accurate) it's another to specifically say "strong hiring likely continued" (totally unsupported by the data we got today).

I think if you're judging the entire industry's underwriting standards based on the size and nature of these loans going bad (identical business models) you probably don't understand what you're talking about. Private credit is not meant to have 0 default rates lmao

I'd say "probably not" rather than "maybe" but the answer is definitely not "OH MY GOD YES WE ARE ALL GOING TO DIE".

you can have a sampling error that survives revision, monthly estimates are not benchmarked to admin data *for that month*, they're benchmarked to admin data for March of the prior year with subsequent changes estimated via statistical sample.

it wasn't backhanded! I believe Veksler Built Different

I never said which bucket you belonged in buddy

Yeah I didn't want to get into the nuances, but all true.

also: not all traders are created equal

Yeah, you know what else is annoying? When people reply to something reiterating what I just said.

For sure! But what are the practical implications of that?

I'm going to wait long enough for you to read this and then you're getting blocked FYI

Read my bio

A good question, I would say $BX reaction was REALLY aggressive and unusual while $BLK is more "by the book". For context, redemption requests were 9.3% of capital for the $BLK fund versus 7.9% for the $BX vehicle - that's a pretty big slug of cash to scrounge together.

in terms of sentiment yes but the write-down was extremely small relative to the whole portfolio

...also CLT boosterism, right

If you're interested in more, @fohf.bsky.social is a legitimate expert in this space as opposed to my generalist perspective and has posted about it. I suspect that is likely to continue! Her thread started yesterday but deals with the BlackRock headline too.

This is BY DESIGN. Because private credit assets are less liquid, they need to be matched with capital that can't easily walk out the door. It doesn't mean nothing bad can happen, but it dramatically narrows the range of possible bad outcomes at a structural level.

For vehicles that have withdrawal caps, it's ~impossible to have a "bank run" where everyone demands their money back at once. That *can* [HYPOTHETICALLY] happen to ETFs. The effect is that private credit is much less likely to face a run that forces liquidations of underlying portfolios.

Another private credit fund, run by Blackstone (different company!) recently allowed withdrawals in excess of the 5% cap...but they made up the difference by putting management's own funds and firm capital into the fund to make up for withdrawals over the 5% cap.

In the case of this BlackRock fund, they are allowing investors to withdraw 5% as doc'd in the funds. They're obliged to let that happen and they're following through. They're just not letting investors withdraw MORE than what was agreed to upfront.

Private credit funds (and a huge host of other vehicles, ranging from PE funds to hedge funds etc) sit in between. Investors are allowed to withdraw funds, but there are generally caps relative to the fund's size. For example, only 5% of fund assets can be withdrawn in aggregate, that kind of thing.

At the opposite end of the spectrum are closed-end vehicles. Closed-end funds are a good example. These have a fixed capital base, which they can adjust with buybacks or new equity issuance but are not obliged to in any way. The capital they invest can't be withdrawn.

ETFs and mutual funds* are open-ended. Funds can flow in and out of them with no real restrictions on movement. So if the portfolio declines, investors can bail immediately (intermediated by creation/redemption in the case of ETFs).

*mostly, there are some exceptions, but y'know, mostly

Okay so having looked at the details of this, it's not what it looks like. To explain, we need to back up and discuss open versus gated versus closed end investment vehicles.

This is a huge story in US soccer right now, folks 👇

2s5s steepening, 5s10s stable, 10s30s flattening is bond market speak for "short-term pain, probably won't get out of hand, the Fed will do its job but this won't get crazy".

Problem is it's all conditional pricing, just like crude.

yeah this is all firmly "not my problem" for my two-EV household.

Oh man we are HAVING A NEWS DAY I see

*BLACKROCK’S $26 BILLION PRIVATE CREDIT FUND LIMITS WITHDRAWALS