Patrick Boyle On Finance Is Private Credit a Threat to The Financial System
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Mar 21, 2026 A deep dive into the booming private credit market and how its rapid growth followed banks after 2008. Stories of fraud, weakened underwriting and valuation tricks that may hide losses. How retail investors got funneled into risky credit products and the liquidity traps that can leave savers stuck. Discussion of contagion risk to banks, insurers and millions of workers if lending tightens.
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Private Credit Filled The Post-2008 Bank Vacuum
- Private credit grew to fill the bank lending vacuum after 2008 by offering illiquidity in exchange for higher yields.
- Pension funds and insurers locked capital for 5+ years so managers could hold bespoke, mid-market loans without daily mark-to-market pressure.
Bankruptcies Revealed Hidden Double Pledging
- First Brands and Tricolor exposed hidden problems when borrowers had overlapping claims on receivables and sudden bankruptcies emerged.
- Market Financial Solutions allegedly hid distress via double pledging and recycling debt until refinancing ran out.
Private Credit Hides Losses With Quiet Handovers
- Private credit defaults are often resolved quietly via handovers rather than public bankruptcy, masking true loss rates.
- Goldman found 146 of 150 European credit-event firms were handled privately, explaining reported tiny loss figures.
