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 SEB:s vd Johan Torgeby tror att utvecklingen kan få stora konsekvenser Han ser den explosiva utvecklingen för riskkapitalfondernas snabbväxande kusin: private credit, privata kreditfonder. De fungerar på liknande sätt som riskkapitalfonder, med kapital från externa investerare som pensions- och försäkringsbolag.  Skillnaden är att kreditfonder lånar ut pengar till företag snarare än köper aktier i dem.   Dagens industri 10 februari 2025 https://www.di.se/nyheter/bankernas-karnaffar-hotad-hur-mycket-kraft-som-helst/ What makes something “private credit,” as opposed to, uh, public credit? https://englundmacro.blogspot.com/2025/02/what-makes-something-private-credit-as.html

  I write a lot about private credit, and I talk sometimes with people running private credit at big asset managers, and this is very embarrassing, but I don’t know what private credit is?  What makes something “private credit,” as opposed to, uh, public credit?  Here is my best approximation of an answer In public credit — the common terms are “the bond market” and “the syndicated loan market” In private credit, a company wants to borrow money, so it deals with some intermediary who already has the money.  You want to borrow money, so you go to an asset manager — Blackstone or Ares or Apollo or Blue Owl or whoever — and say “can I borrow money,” and they say “sure, here you go.”  They just write you a check.  But even in private credit, you deal with an intermediary.  The asset managers are not principals; they don’t just have money; the Apollo partner negotiating a deal with you isn’t just lending you money from her personal account. The asset manage...

History of Eurodollars Part 1: Cold War Origins https://englundmacro.blogspot.com/2025/01/history-of-eurodollars-shadow-banking.html History of Eurodollars, Part 2: Defending the Dollar System https://www.bloomberg.com/news/articles/2025-01-15/the-hidden-history-of-eurodollars-part-2-defending-the-dollar-system History of Eurodollars, Part 3: Spinning Out of Control https://www.bloomberg.com/news/articles/2025-01-16/the-hidden-history-of-eurodollars-part-3-spinning-out-of-control

US remained vulnerable to the same combination of problems that caused major recent crises,  including the 1980s savings and loan collapse,  https://englundmacro.blogspot.com/2021/10/before-1986-act-s-were-primary-source.html https://englundmacro.blogspot.com/2021/04/financial-crises-get-triggered-about.html S&L Savings and Loans Banking Crisis Rolf Englund the 2008 financial crisis  https://englundmacro.blogspot.com/2024/09/us-counts-its-bank-bailout-billions.html and the 2023 regional bank runs.  FDIC Says It Should Have Done More to Supervise First Republic Bank https://englundmacro.blogspot.com/2024/09/worst-performance-for-stocks-since-2023.html The Silicon Valley Bank Rescue Changed Capitalism https://englundmacro.blogspot.com/2023/03/the-silicon-valley-bank-rescue-changed.html In each case, deregulation and looser supervision enabled the rapid growth of new products and nonbank financial companies that later proved to be riskier than anticipated. Financial...

 The £37.6bn Wellcome Trust’s Nick Moakes told the Financial Times that big investors in such funds could suffer “very substantial” losses if the US economy eventually falls into recession. Financial Times 14 January 2025 https://www.ft.com/content/62a40125-0f58-4855-b443-f3385c16a604 Plender - As the IMF has warned, the rise and rise of private credit brings systemic risks https://englundmacro.blogspot.com/2025/01/plender-as-imf-has-warned-rise-and-rise.html

  For many years private markets have raised more in equity than public markets,  where shrinkage as a result of share buybacks and takeover activity has not been made good by a dwindling volume of new issues.  The vibrancy of private markets means that companies can stay private indefinitely, with no worries about gaining access to capital. Much of the dynamic behind the shift to private markets is regulatory.  Tougher capital adequacy requirements on banks after the financial crisis drove lending into more lightly regulated non-bank financial institutions. John Plender Financial Times 4 January 2025 https://www.ft.com/content/b75bd032-7395-4ab1-812d-e1ed5ad58aac US set for IPO comeback as private equity firms seek to offload holdings Financial Times 5 January 2025 https://www.ft.com/content/5dcf3d4e-8e16-470b-b33d-fc73d3043f58 The private credit market $1.5 trillion https://englundmacro.blogspot.com/2023/05/the-private-credit-market-15-trillion.html Tillbaka till R...

One of the hottest bits of high-octane financial engineering these days.  In SRTs, a bank offloads some or all of the risks of some of its loans to ease how much capital it has to set aside for regulatory purposes.  The loans remain on the bank’s balance sheet, but the buyer of an SRT typically promises to cover a chunk of the losses if the loans go bad.  The buyers are investors such as insurance companies, hedge funds and (increasingly) private credit funds, which take on the risk in exchange for a fee. Robin Wigglesworth Financial Times 20 December 2024 https://www.ft.com/content/d91d35fc-93ab-4963-8587-7a00fe5c63b4 The deal is known on Wall Street as a synthetic risk transfer https://englundmacro.blogspot.com/2024/06/the-deal-is-known-on-wall-street-as.html Tillbaka till Rolfs länktips 20 december 2024 https://englundmacro.blogspot.com/2024/12/rolfs-lanktips-20-december-2024.html

Investors’ “relentless” appetite for juicy returns has triggered the biggest boom on Wall Street in complex financial products since the lead-up to the global financial crisis in 2007. The global volume of structured finance transactions has hit $380bn this year Still, analysts say the size of the market is small enough to avoid creating systemic risk. Financial Times 9 December 2024 https://www.ft.com/content/5219f962-3499-4928-8c73-5610b7a0109e On Thursday August 9 2007, financial markets suddenly seized up. Gillian Tett https://englundmacro.blogspot.com/2021/03/on-thursday-august-9-2007-financial.html Watch Out: Wall Street Is Finding New Ways to Slice and Dice Loans https://englundmacro.blogspot.com/2024/10/wall-street-new-ways-to-slice-and-dice.html Japan’s 1989 property-and-equity bubble or the pre-2007 housing-and-structured-debt bubble. Britain’s 1846 Railway Mania James Mackintosh  https://englundmacro.blogspot.com/2020/09/britains-1846-railway-mania.html

  The exercise required a group of more than 50 City of London institutions to model how a period of intense stress would ripple through the increasingly important non-bank sector. It underlines how regulators are shifting their focus to risks arising outside the banking system. Financial Times 29 November 2024 https://www.ft.com/content/139a0862-1d14-44c7-87a9-fab6a860032d Banks Need to Worry About Shadow Banks Global supervisors at the Financial Stability Board call these non-bank financial intermediaries. https://englundmacro.blogspot.com/2022/11/banks-need-to-worry-about-shadow-banks.html Tillbaka till Rolfs länktips 3 december 2024 https://englundmacro.blogspot.com/2024/12/rolfs-lanktips-3-december-2024.html

  Financial Stability Board says life insurers and REITs also at risk from the combination of funding vulnerabilities and unrealized losses In a new report released Wednesday, FDIC Quarterly 2024 Vol 18 No 3   the Financial Stability Board, an international body of global regulators, delved into the issues that brought about the collapse of Credit Suisse, the failure of SVB, Signature and First Republic, and the liquidation of Silvergate. Steve Goldstein MarketWatch 23 October 2024 https://www.marketwatch.com/story/theres-still-a-weak-tail-of-banks-prone-to-the-runs-that-brought-down-svb-and-credit-suisse-regulators-warn-4c1dec58 Shadow Banks; Global supervisors at the Financial Stability Board call these non-bank financial intermediaries https://englundmacro.blogspot.com/2022/11/banks-need-to-worry-about-shadow-banks.html JPMorgan to take over First Republic  https://englundmacro.blogspot.com/2023/05/jpmorgan-to-take-over-first-republic.html Tillbaka till Wall Street och...

Banks have a fundamentally risky business model, borrowing short (by taking deposits) and lending long. In some ways it would be nice if, instead of banks with risky short-term deposits, somebody else, somebody with long-term funding, did all the risky lending.  Banks could take deposits (a risky funding model), and then invest them very safely; other investors could raise long-term equity funding (a safe funding model), and use it to make risky loans and investments. Loosely speaking, this is called “narrow banking.” Where can you borrow all that money? Well, from banks, obviously. They have lots of money! They are in the business of making loans! It just makes sense. This sort of takes us back to Step 1, doesn’t it?  The risky business itself — proprietary trading, financing leveraged buyouts — is shifted from the banks to other firms, but the other firms turn around and borrow money from the banks to help fund it. Matt Levine is 12 juni 2024 https://www.bloomberg.com/opinio...

  Less than 15 months after the world’s most recent banking crisis, regulators in the US and Europe are already poised to rol back reforms aimed at reducing the risk of further financial disasters.  It’s a serious mistake. The problem is that executives prefer to employ as little equity and as much debt as possible, because this maximizes government subsidies and boosts measures of profitability in good times. Equity levels rose significantly, peaking at about 7% of assets among the largest American banks — though this was still less than half what research and experience suggest would be needed to weather a severe crisis.  Europe was a laggard, barely exceeding 5% of assets (according to the most comparable measure). A race to the bottom won’t end well for anyone. Bloomberg Editorial 5 June 2024 https://www.bloomberg.com/opinion/articles/2024-06-05/fragile-banks-won-t-make-us-europe-stronger Post-2008 regulations may save us from a bank panic. The danger is every other f...