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Wall Street Banks Tighten Terms for Private Credit Funds, Raise Rates and Cut Collateral Valuations
Bloomberg, citing sources, reported that several Wall Street banks have tightened cooperation terms with private credit funds, not only raising financing rates but also lowering th...
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Wall Street Banks Tighten Terms for Private Credit Funds, Raise Rates and Cut Collateral Valuations
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Bloomberg, citing sources, reported that several Wall Street banks have tightened cooperation terms with private credit funds, not only raising financing rates but also lowering the valuations of certain loans used as collateral. The report said JPMorgan (JPM.US)      , Goldman Sachs (GS.US)      and Barclays have exercised their rights to mark down individual assets, prompting private credit funds to replace holdings from their financing pools.

Sources said banks are continuously increasing the rates charged on back-end leverage. In some cases, senior executives have personally intervened to adjust leverage business rates and tighten collateral terms. Some rates have risen to more than 3% above the Secured Overnight Financing Rate (SOFR) benchmark, representing increases of 50 to 150 bps. This has made it more difficult for private credit fund managers to achieve their targeted returns and reduced their buffer margins, even though managers may charge higher interest rates on corporate loans to offset the impact. The report also cited some fund managers as saying that spreads in the private credit market are widening.

Sources added that JPMorgan has tightened lending to certain funds by lowering the valuations of some loans within their portfolios. Market participants quoted in the report said that while the bank offers relatively lower interest rates when providing leveraged financing, it also demands greater authority to adjust collateral valuations. The report also noted that some banks are closely reviewing loans extended to software companies and other sectors that may face risks from artificial intelligence in the coming years.

The largest US banks disclosed this week that their total exposure to private credit firms amounts to approximately USD180 billion. JPMorgan, Wells Fargo (WFC.US)      and Citi (C.US)      reported related exposures of USD50 billion, USD36.2 billion and USD22 billion, respectively. (fc/u)(Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)



This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation.

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