The Private Credit Boom is Over: Redemption Requests Exceed Liquidity | James Elbaor | Marlton LLC – Monetary Matters with Jack Farley

The Private Credit Boom is Over: Redemption Requests Exceed Liquidity | James Elbaor | Marlton LLC – Monetary Matters with Jack Farley — Transcript

Market views

Bullish

PSUS— Pershing Square (PSUS) is a permanent capital vehicle trading at premium multiples due to its superior structure, industry-leading margins, 80% payout ratio, and ability to compound capital without redemption constraints. The permanent capital model is viewed as the future of asset management.
BDC— Public BDCs trading at 60-65 cent discounts to NAV represent a cost of liquidity opportunity rather than NAV impairment. Event-driven merger arbitrage opportunities exist as funds trading at larger discounts will be acquired by those at smaller discounts on NAV-for-NAV basis.
BPRE— BPRE (Blue Owl interval fund converted to closed-end) trading at 38% discount to NAV presents event-driven opportunity as the fund will eventually return capital or find a merger partner, allowing investors to amortize the discount over time.

Bearish

PRIVATECREDIT— The private credit boom is definitively over with no new capital flowing into the strategy. AI disruption of SaaS companies (major private credit exposure) combined with redemption pressures and higher refinancing rates create structural headwinds.
APO— Apollo and other alt managers heavily exposed to private credit and wealth channels are being penalized by the market. Down roughly 12% while permanent capital vehicles like Pershing Square have doubled, reflecting structural disadvantages of their business model.
BX— Blackstone faces the same structural headwinds as Apollo - heavy private credit exposure, wealth channel investments, and high workforce costs. Down 12% while permanent capital models outperform, reflecting market's preference for different business structures.
OWL— Blue Owl is down nearly 35% due to heavy private credit concentration. The firm faces redemption pressures and the structural end of the private credit boom, with no clear path to growth.
SAAS— SaaS companies face existential disruption from AI tools, with firms using AI instead of subscribing to new SaaS providers. This is particularly problematic as SaaS represents heavy exposure in private credit portfolios that need to refinance into higher rates.

Not investment advice.