“A succession of high-profile defaults connected to bankruptcies and fraud allegations have raised questions about the health of credit markets, centered around the rapid growth of the $1.1 trillion US private credit market. The collapses of car parts manufacturer First Brands and auto loans company Tricolor in September led to fears that poor-quality loans could have a wider impact on financial markets. Then, weeks later, two regional banks announced write-downs on loans they had made to a commercial real-estate firm. “With each successive credit event that comes to light, it becomes harder to say that these are all totally unconnected. But at this stage, we would still very much come down on the side of these being idiosyncratic events and not credit-type events,” says Spencer Rogers, a credit strategist in Goldman Sachs Research.”
Morten W. Langer
