Is the private equity credit problem as serious as Bank of America Hartnett said? He believes that the private credit market is issuing a risk warning: two key indicators of bank loan funds have broken simultaneously, with SRLN falling below $40 and XLF falling below $52, indicating that credit risk is beginning to spread to the financial system. And historical patterns show that the loosening of bank loan funds always precedes broader market shocks, such as the 2020 pandemic and the 2022 UK pension crisis. My personal opinion is slightly different: 1. The market size is about 2 trillion US dollars, and some say 3 trillion US dollars (different definitions), which has surged more than 5 times in the past 10 years, mainly to fill the gap of medium-sized enterprise loans and vacancies left by banks. Mainly after 20 years; 2. There have indeed been some issues The retail/semi liquid fund OBDC II under the big player Blue Owl Capital (managing over 300 billion) has stopped quarterly redemptions and switched to "loan repayment+irregular distribution after asset sales". Previously, 1.4 billion assets were sold to cope with redemption pressure, causing a sharp drop in stock prices and triggering market concerns. Similar to New Mountain, there are also movements. 3. But the difference from before the subprime crisis broke out in 2007 is that: 1) Most of the funds come from institutions with lock up periods/long-term commitments; 2) The leverage of the fund itself is not high, and the CLO ratio is still much lower than that of CDO in the past; 3) The Fed report states that banks' direct exposure is "limited and absorbable". Some institutions interpret Blue Owl's move as an "orderly return of capital+structural adjustment", selling assets close to face value, rather than a full-scale run on the market. 4. According to reports from several institutions such as Da Mo, it is believed that: 1) 26 is expected to continue expanding (possibly nearly 5 trillion by 2029), with new money still coming in, but the retail sector is slowing down and institutions are becoming more picky. 2) The default rate of direct loans has risen to 2-5% in 26 years (from around 1.5% in 2025), which belongs to "normalization" rather than crisis. 3) The yield is still high (8-8.5%+for first tier preferred bonds), which is still attractive to qualified investors. My personal opinion is that private equity credit, due to the opacity of its underlying assets, can easily trigger panic if problems arise, but now it still belongs to emotional risk (causing concern). Its CLO ratio is still low, the leverage ratio of private credit funds is not high, and the large-scale outbreak of private credit occurred in 2022 (now more than half of the volume is issued after 2022), which has not yet reached the centralized redemption period. So overall, it is still a risk signal and a stress test for the industry. The stage of facing major problems is still far away. This area is not very professional, please share with friends who understand it.