Overview

• Jamie Dimon warned on July 15 that private credit’s rapid growth hasn’t been stress-tested by a recession and could trigger a wave of defaults if the economy weakens.
• JPMorgan has dedicated $50 billion of its investment-bank capital to launch an in-house private credit arm and compete with established non-bank lenders.
• Non-bank private credit has expanded into a $1.6 trillion asset class since 2006, filling a lending gap left by post-crisis banking regulations.
• The largest segment of private credit consists of collateralized, investment-grade loans backed by assets from data centers to aircraft and funded by pension funds and insurers.
• Operating largely outside bank oversight, private credit’s light regulation raises concerns that a liquidity squeeze could spark broader financial contagion.