Private Credit Market Echoes 2007 Subprime Warning Signs, Experts Warn

Private Credit Market Faces Growing Risk of Spillover into Public Securities Markets

March 10, 2026

The private credit market is exhibiting signs of stress, with $2 trillion in assets, less than 1% of all global securities, facing mounting redemptions and illiquidity. This has led to parallels being drawn with the 2007-09 Global Financial Crisis (GFC), where similar conditions led to a global financial meltdown.

BlackRock, the world's largest asset manager, has limited withdrawals from a flagship debt fund due to a surge in redemption requests. Blackstone has also raised the redemption cap on its BCRED private credit fund to meet record withdrawal requests. These actions come after Blue Owl experienced a similar event last month and First Brands and Tricolor filed for bankruptcy late last year, prompting warnings from JPMorgan Chase CEO Jamie Dimon.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Investors with a history of the GFC may recall the blockage of redemptions from U.S. subprime funds by BNP Paribas, Bear Stearns, and HSBC in 2007. While the private credit market is not believed to pose a systemic financial stability risk, the lack of transparency and liquidity in the market makes it difficult to determine the true value of assets.

Private Credit Default Rates Rise

Private credit default rates have reached a record 9.2% in 2025, up from 8.1% in 2024, according to Fitch Ratings. This increase, combined with the involvement of retail investors, who represented 16.6% of holdings in private credit funds at the end of 2024, up from 5.5% in 2020, raises concerns about the broader risks to the market.

Software Sector Defaults a Concern

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

The software sector, which has been heavily invested in private credit, has seen defaults rise due to fears of artificial intelligence-related disruption. This has led to significant declines in shares of Blackstone, KKR, and Apollo, down 30-45% in recent months.

While the consensus view is that the economy's underlying fundamentals are solid and private credit is not large enough to torpedo GDP growth or broader asset markets, the recent events in the private credit market suggest a growing risk of spillover into public securities markets.