Rebel Capitalist News BREAKING: Private Credit Crisis Just Got Worse
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Feb 19, 2026 Discussion of private credit turmoil highlighted by a halted fund merger and tightened liquidity. Explanation of how private credit works and why retail access raises concerns. Examination of fee incentives, opaque NAVs, asset sales to pensions, and red flags from high yields. Exploration of potential contagion to big managers, banks, and the real economy.
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Private Credit Is Risky Spread Capture
- Private credit fills lending gaps left by banks by lending to much-riskier borrowers at high spreads.
- George Gammon argues that high yields signal hidden risk and mispriced credit in these funds.
Watch Manager Incentives Closely
- Avoid trusting managers who earn large upside fees with little downside skin in the game.
- Demand transparency and beware funds structured like free call options for managers.
Semi-Liquid Products Hide Liquidity Risk
- Semi-liquid retail products obscure true liquidity and hide redemption risk.
- George Gammon notes retail investors often misunderstand quarterly redemptions and potential paper losses.