The discount pileup
Private credit funds are suddenly wearing a bigger “sale” tag than they have in years. Their shares are trading at the deepest discounts to net asset value in more than 5-1/2 years, which is finance-speak for: the market thinks those assets may not be worth quite what the spreadsheets say they are.
Why investors are getting jumpy
That skepticism is showing up as concerns around two big things:
- valuations that may be too rosy
- mounting stress inside the private credit sector
If you’re an investor, this is the part where the vibe check matters. A wide discount doesn’t automatically mean disaster, but it can be the market’s way of saying, “show me the receipts.”
Why this can spill over
Private credit has been one of the hotter corners of the lending world, especially as banks pulled back and funds stepped in like the substitute teacher with a fancy blazer. But when the shares of those funds start trading at steep discounts, it can hint that the easy-money era is getting a little less easy.
Big picture
The takeaway isn’t that private credit is dead — not even close. But when investors start demanding a bigger margin of safety, it usually means the sector’s glow-up is getting a stress test.