Public insights on private credit: Only one of private credit’s “four horsemen” is real

Private credit is facing a wave of concern, but much of the alarm reflects isolated events rather than broad market damage. Recent fraud cases and retail redemption headlines are serious, yet they do not point to systemic weakness across the asset class, where default rates remain manageable and valuations have held up. The more meaningful issue is that returns may normalize as rates fall, which should be viewed as a cyclical shift rather than a structural failure.

The real risk lies in AI disruption to software borrowers, a large slice of many private credit portfolios. Investors should focus on how exposed managers are to software sub-sectors and whether loan structures have enough protection if growth slows or business models weaken.