Weekly Best Of: Finstab
May 31 – Jun 07, 2026
5 starred + 14 top-scored articles
May 31 – Jun 07, 2026
5 starred + 14 top-scored articles
Generated: June 07, 2026 at 03:53 AM ET
Issue #100 of Private Credit News Weekly covers several concurrent developments in private credit markets. The headline transaction is a $35 billion deal led by Apollo and Blackstone to finance Google's custom TPU chips, which are leased to AI company Anthropic. The structure uses a special-purpose vehicle backed by lease payments, with Broadcom providing credit support on the senior tranches. The $6 billion A1 notes priced at 100 basis points over Treasuries, the $24 billion A2 notes at 5.75% (partly bought by Apollo's Athene insurance arm), and an unbacked $4.5 billion tranche at 8.5%. Apollo's Atlas SP contributed $800 million in equity. Simultaneously, three large retail-oriented private credit funds restricted withdrawals. Blackstone capped BCRED redemptions at 5% after investor requests reached a record 10%. Cliffwater gated its $31 billion flagship after requests hit 17%, returning roughly a third. Monroe Capital capped redemptions for the first time after investors sought 9%. S&P placed a negative outlook on Cliffwater. The private credit default rate reached 6% at end of April, a record since Fitch began tracking the metric, driven by industrial, manufacturing, and business services sectors. At the Bloomberg Global Credit Forum, Glendon's Holly Kim described a building pipeline of defaults, and Davidson Kempner's Suzanne Gibbons noted that EBITDA addbacks have roughly doubled over the past decade, meaning reported loan-to-value ratios of 45% may reflect actual leverage closer to 65%. Jay Clayton, U.S. Attorney for the Southern District of New York, said his office is examining cases where the same loan is marked at materially different prices across managers—specifically where most holders mark at 75 while a fee-collecting outlier marks at 95. He cited First Brands, Tricolor, and 777 Partners as examples. Institutional fundraising continued amid retail pressure, with Eurazeo raising €3.9 billion, Crescent Capital closing its largest fund ever at over $5.5 billion, and FS KKR selling $900 million in junk bonds at 7.5% against $1.5 billion in demand. Apollo President Jim Zelter predicted two more quarters of redemption turbulence, noting that gating at 5% encourages investors to over-request, inflating headline redemption figures.
Keywords: private credit, redemption caps, leverage, shadow banking, default rate, liquidity stress, financial intermediaries, Apollo Global Management, Broadcom, maturity transformation, credit deterioration
In this second installment of a series published on Rod Dubitsky's Substack, Dubitsky examines approximately $13 billion in Athene Holdings investments he describes as effectively equity-backed but carrying investment-grade (IG) ratings and reported as fixed-income assets on Schedule D of Athene's statutory filing. He argues this classification results in capital charges roughly 97% lower than what the underlying collateral would require if treated as equity. The article focuses on a category the NAIC added in 2025 called Equity-Backed ABS (E-ABS), created in response to concerns about insurers converting equity risk into IG fixed-income classifications. Dubitsky calculates that reclassifying Athene's roughly $9.6 billion in E-ABS from Schedule D to Schedule BA (the equity schedule) would trigger approximately $3 billion in additional capital requirements before any actual investment losses occur. He notes that $500 million in Athene assets were already reclassified from Schedule D to Schedule BA in 2025. The article examines four specific Apollo-affiliated holdings: AMAPS (Apollo Multi-Asset Prime Securities, approximately $5 billion), a CLO-like structure with Single-A and BBB private letter ratings that Dubitsky argues is contradictorily classified as both equity-backed and 50% IG-credit-backed; AP Alkaios, an SPV tied to German utility RWE that Athene's own presentation describes as structured to qualify as equity for RWE yet is carried by Athene as BBB+ debt; Atlas Securitized Products (approximately $1.4 billion of a broader $5 billion Atlas exposure), classified as Single-A E-ABS requiring roughly $12 million in capital under current treatment versus an estimated $500 million if reclassified; and APADS/Fox Hedge LP (approximately $3.2 billion), a Bermuda-based vehicle described by Bloomberg as bundling mixed Apollo assets with IG ratings and maturities up to 40 years. Throughout, Dubitsky argues that post-GFC rating agency reforms have failed and that agencies are assigning IG ratings to equity-backed structures with insufficient scrutiny.
Keywords: Athene Holding, Asset-backed securities (ABS), Equity-backed securities, Capital charges, Regulatory capital, Insurance holding company, Leverage optimization, Alternative investments, Balance sheet risk
A Federal Reserve Finance and Economics Discussion Series (FEDS) paper by Klee, Lubis, Chase Ross, Sharon Ross, and Vardoulakis (June 2026) argues that digital money possesses a novel form of fragility rooted in how it handles trust. Unlike traditional money, which relies on a trusted institution to settle payments, digital money uses decentralized verification whose costs are charged through congestion-sensitive gas fees. The authors identify two opposing forces that interact to create instability: network externalities, which increase digital money's value as more users adopt it, and congestion fees, which raise transaction costs as usage grows. The paper demonstrates that this interaction generates strategic complementarities in users' redemption decisions, meaning individual incentives to redeem are influenced by expectations of others' behavior. The authors show this dynamic can produce runs on digital money even when it is fully backed by perfectly safe reserves. The paper applies a global games framework and addresses stablecoins, digital assets, payments, and financial stability. The views expressed are those of the authors and do not represent official positions of the Federal Reserve Board or its staff.
Keywords: digital money, bank runs, financial fragility, payment systems, redemption risk, liquidity, network externalities, congestion fees, monetary system design, Federal Reserve research, systemic risk, financial stability
A Federal Reserve Finance and Economics Discussion Series working paper by Maximilian Grimm, Moritz Schularick, and Emil Verner examines the economic effects of financial liberalization using a new cross-country database covering 21 regulatory indicators for 18 advanced economies since World War II. The authors distinguish between liberalizations that directly relax credit supply constraints and broader financial reforms, finding that only the former produce significant boom-bust dynamics. Credit supply liberalizations lead to substantial expansions in private credit concentrated in non-tradable sectors, without accompanying rises in interest rates or credit spreads in the short run—consistent with an outward shift in credit supply. Real GDP rises over the following two to four years, but the gains are temporary, with GDP returning to trend in the medium run and an elevated risk of financial crisis and worse downside growth outcomes. The paper concludes that financial liberalization is welfare-improving only for coefficients of relative risk aversion below 7.2, described as a moderately high value. The paper is identified as FEDS 2026-034 and represents the views of the authors, not the Federal Reserve Board.
Keywords: financial liberalization, credit booms, financial crisis risk, banking regulation, credit supply, private credit expansion, regulatory policy, boom-bust cycles, financial stability, systemic risk
Writing on his Grumpy Economist blog, John Cochrane examines speculation that a SpaceX IPO would cause index funds to mechanically bid up prices—potentially without limit—due to their inelastic demand for large new entrants to major indices. Cochrane argues this concern misapplies partial-equilibrium thinking. Using a simple scenario, he traces where money flows in both directions during an IPO: buyers sell other holdings to purchase SpaceX shares, while sellers use proceeds to buy other stocks, leaving prices largely unchanged in first-order terms. He extends this logic to the case where SpaceX raises fresh capital for new investment, arguing that money flows away from funding other companies' investments, again with no first-order price distortion. He invokes a Modigliani-Miller framing, arguing that any price effect requires a specific MM violation, not just a demand curve for one stock. On passive investing's effect on market efficiency, Cochrane contends that as more investors go passive, returns to active fundamental research rise, incentivizing others to remain active, so overall market elasticity of demand is not obviously reduced. He acknowledges that S&P 500 index inclusion does produce a small measured price effect—recent estimates around 4–5%—but characterizes this as a modest friction-based anomaly rather than a mechanism for runaway valuation. He closes by cautioning against using demand curves for individual stocks untethered from budget constraints and equilibrium conditions, and endorses applying MM discipline before concluding that mechanical flows drive prices to extreme levels.
Keywords: SpaceX IPO, Index funds, Market capitalization weighting, Passive investing, Asset valuation
US Attorney Jay Clayton, described as Wall Street's top prosecutor and a former SEC chairman, stated at the Bloomberg Global Credit Forum in New York on June 3 that his office is examining potential valuation discrepancies in the private credit market. Clayton made the remarks in an interview with Bloomberg News' Sridhar Natarajan. No further details about specific cases or targets are provided in the article text.
Keywords: private credit market, valuation discrepancies, shadow banking, US Attorney, SEC, financial regulation, asset valuation, credit market integrity
In a Bloomberg Real Yield segment, Meghan Robson, head of US credit strategy at BNP Paribas, and Sonali Pier, portfolio manager of multi-sector credit at PIMCO, discuss conditions in private credit markets. The conversation comes amid news that Cliffwater, Blackstone, and Partners Group all capped certain fund redemptions during the week, drawing renewed attention to private markets. Robson's characterization, reflected in the segment title, describes any deterioration in private credit as slow and contained.
Keywords: private credit, redemption caps, liquidity stress, shadow banking, leverage, maturity transformation, Blackstone, PIMCO, BNP Paribas, Partners Group, Cliffwater, financial stability
Bloomberg journalists Katie Greifeld and Olivia Fishlow interviewed Jason Dillow, co-head of US private credit and head of US opportunistic credit at Man Group, on the program 'Bloomberg Real Yield.' The conversation came amid news that Cliffwater, Blackstone, and Partners Group all placed caps on certain fund redemptions during the same week, developments that returned private markets to broader scrutiny.
Keywords: Private credit, Redemption caps, Liquidity stress, Shadow banking, Asset managers, Blackstone, Partners Group, Cliffwater, Maturity transformation, Investor redemptions
Friday's strong jobs data has complicated the position of Kevin Warsh as the new Federal Reserve chairman. The labor-market rebound is described as setting up a potential conflict involving Warsh, the bond market, and the White House, with the data fueling a hawkish shift in market expectations and increased bets on interest rate hikes.
Keywords: Federal Reserve, Kevin Warsh, Interest rates, Monetary policy, Labor market data, Bond market, Rate hike expectations, Financial conditions, Central bank policy
A Financial Times article questions whether US Treasury securities, long considered a safe-haven asset for the global financial system, are transforming into a source of financial risk and instability. The piece is filed under the central banks and global economy topics. The available text is limited to a brief framing statement, with the full argument behind a paywall.
Keywords: US Treasuries, financial chokepoint, market liquidity, haven assets, central banks, systemic risk, Treasury market dysfunction, collateral, money markets
An article from *The Economist* (Leaders section, paywalled) argues that the U.S. Treasury market is deteriorating and requires corrective action. According to the piece, high levels of debt, fragmented or disjointed market structures, and an aggressive trade policy are identified as factors threatening the status of U.S. Treasuries as the world's preeminent safe asset.
Keywords: Treasury market, Government debt, Safe asset, Market liquidity, Financial system stability, Maturity transformation, Reserve currency, Market infrastructure, Risk premiums, Trade policy
Federal Reserve Governor Michael Barr has spoken out against recent regulatory moves to ease rules on US banks, warning that the proposals 'considerably weaken bank regulation and supervision.' Barr criticized actions taken by regulators over the past year to relax requirements for Wall Street lenders.
Keywords: Federal Reserve, bank regulation, supervision, prudential standards, wall street banks, regulatory reform, Michael Barr, systemic risk, banking system, capital requirements
Dallas Fed President Lorie Logan issued a direct warning that the Federal Reserve may need to raise interest rates this year in order to address inflation. Her remarks are described as among the most explicit signals yet from a U.S. central banker regarding the potential need to tighten monetary policy.
Keywords: Federal Reserve, interest rate hike, monetary policy, inflation, Lorie Logan, Dallas Fed, monetary tightening, central bank communication
Federal Reserve Governor Michael Barr delivered a speech at American University on June 6, 2026, warning that recent regulatory and supervisory changes by the Federal Reserve and other banking agencies are materially weakening the safety and soundness of the U.S. banking system and increasing financial stability risks. Barr identified several specific deregulatory actions from which he states he has dissented. These include reductions in the stringency of bank stress tests, erosion of the leverage ratio for large banks, a proposed U.S. implementation of the Basel III international capital agreement that he argues falls short of the accord's standards, and a reduction in the GSIB surcharge applied to the eight largest systemically important banks. In aggregate, he states these proposals reduce required capital for the largest banks by approximately 6 percent, equivalent to roughly $60 billion less in capital, while those eight firms hold around 60 percent of banking sector assets. On supervision, Barr says the Federal Reserve weakened the rating system for the 36 largest financial institutions — characterizing the changes as 'grade inflation' — and that matters requiring attention issued to banks fell to roughly half their 2024 level by end of 2025. He also cites reduced staffing and curtailed horizontal reviews as limiting regulators' ability to identify systemic weaknesses. Barr additionally raises concerns about anticipated reductions in liquidity requirements and scaled-back consumer financial protection oversight at the Consumer Financial Protection Bureau, drawing a parallel to pre-Global Financial Crisis conditions. Citing academic literature, Barr argues that while deregulation can produce short-term economic gains through expanded lending and higher bank profits, it historically increases the probability and severity of financial crises, whose long-term economic costs are large and persistent. He describes current capital standards as already near the low end of academically estimated optimal ranges and warns that deviating from international accords risks a global 'race to the bottom' on capital requirements. He states his intention to continue publicly opposing these changes.
Keywords: Federal Reserve, financial deregulation, financial stability, banking system, economic cycles, leverage, capital requirements, procyclical regulation, macroprudential policy, regulatory rollback
The European Central Bank is poised to raise interest rates in the coming week, a move that would position it as the leading hawkish voice among G7 central banks amid global monetary tightening linked to the Iran war, according to Bloomberg Markets.
Keywords: European Central Bank, interest rate hike, monetary policy, G7, eurozone, inflation, geopolitical risk, financial conditions
Federal Reserve officials have shifted their focus toward resurgent inflation. With the jobs market described as stable, the Fed is showing reluctance to lower interest rates.
Keywords: Federal Reserve, Monetary Policy, Inflation, Interest Rates, Labor Market, Financial Conditions, Central Bank Policy
The article reports that a rebound in cash earnings growth in Japan — described as the highest since the end of 2024 — is seen as supporting the case for the Bank of Japan to raise interest rates in June.
Keywords: Bank of Japan, monetary policy, interest rates, cash earnings, wage growth, labor market, macroeconomic conditions, inflation, financial conditions
The article, published by the Financial Times, states that the European Central Bank is in a position to continue raising interest rates even as the economy shows signs of gradual weakening. According to the piece, inflationary concerns are currently outweighing worries about economic slowdown, suggesting the ECB's policy direction remains oriented toward combating inflation despite softening economic conditions.
Keywords: European Central Bank, interest rates, monetary policy, inflation, economic growth, eurozone, financial conditions
Economist Ken Rogoff, speaking to Bloomberg, argues that the U.S. dollar's dominance as the world's reserve currency is unlikely to collapse abruptly but is facing growing pressures from multiple directions. Internationally, Rogoff points to the war in Iran, increased global military spending, and China's efforts to expand yuan usage as factors pushing toward a more multipolar financial system. Domestically, persistent U.S. fiscal deficits, rising debt levels, and higher interest rates are cited as headwinds for America's financial standing. While Rogoff acknowledges the dollar remains deeply embedded in global trade and finance, he warns that its gradual erosion is already underway.
Keywords: reserve currency, dollar dominance, yuan internationalization, US fiscal deficits, debt burdens, interest rates, international monetary system, multipolar currency, global finance, financial stability