Goldman says private credit panic may be overdone

Cockroach season, apparently

Jamie Dimon’s famous “cockroaches” line lit a fire under the private credit trade, and the market has been acting like the pantry is full of them. Shares of big alternative-asset managers have been getting dinged, while BDCs are trading at chunky discounts to net asset value. Translation: investors are nervous, and they’re pricing in a lot of bad news.

Goldman’s counterpunch

Goldman Sachs basically walked into the room and said, “Slow down.” Its takeaway is that defaults, overdue loans, and other stress markers still look contained. The firm pointed to a few uncomfortable truths — sure — but argued the data doesn’t yet scream systemic breakdown. Realized losses in the Cliffwater Direct Lending Index are still below long-run averages, yields remain healthy, and payment-in-kind income hasn’t exploded the way it did during past stress events.

Why this matters for your portfolio

If the private credit machine were really seizing up, you’d expect the warning lights to be flashing brighter by now. Instead, the numbers still suggest borrowers are mostly paying up and muddling through. That’s bullish for names like Blackstone, KKR, Ares, and Blue Owl — at least if the macro backdrop behaves.

The catch

Goldman’s optimism is tied to a pretty specific vibe check: stable growth, manageable inflation, and a Fed that keeps easing without waking up inflation’s evil twin. If recession risk rises, oil spikes, or AI starts shredding some software borrowers faster than expected, the whole “buy the dip” thesis gets a lot less cozy.

Big picture: the market may be treating private credit like a crime scene before the forensic report is in. Goldman says the evidence still looks more like a scrape than a crack.