JPMorgan Chase (JPM) has marked down the value of certain loans held by private-credit groups and is tightening its lending to the sector, the Financial Times reported on Wednesday. The move limits how much the U.S. bank lends to private credit groups against those loans into the future, according to the report, which cited people familiar with the matter.
The devalued loans are to software companies, the report said, a sector that’s been in the spotlight in recent weeks.
Chief Executive Officer Jamie Dimon told investors at the bank’s leveraged finance conference last week that it’s being more prudent in lending against software assets, the report said. One person familiar said the move was made preemptively to reduce the amount of credit available to the funds. Private credit executives said they hadn’t seen other banks take a similar view, the FT reported.
A wave of worry about climbing defaults on loans to software companies is setting up firms in the private credit market for a shakeout, Apollo Global Management (APO) CEO Marc Rowan said recently. BlackRock (BLK) has meanwhile curbed withdrawals from its private credit fund after a surge in redemption requests, becoming the latest to be highlighted in the broader private credit issue.
In February, Blue Owl Capital (OWL) permanently restricted withdrawals from a $1.6B private credit vehicle and sold $1.4B in loans to pension funds and its own insurance company.