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The private credit market, valued at $1.7 trillion, is facing scrutiny due to concerns of overvalued assets and hidden debt. Private equity's move into asset-based finance is causing unease over concentration risk and lack of regulation. Financial repression policies are crowding out private sector investment, leading to lower growth and inflation. The market is witnessing a boom in orphan derivative hedges as direct lending disrupts traditional hedging practices.
The rising risks of financial repression via @FT https://t.co/d55M3E2zvR
NEW: Private credit boom spurs market for "orphan" derivative hedges Corporates traditionally did their rates and FX hedging with their relationship banks, but the growth of direct lending is disrupting that practice Cool story from @NRega_Jones https://t.co/WWBmvTU2SL https://t.co/e2a9GNOHDG
Shout out to Russell Napier in @albertedwards99 's latest. He sees cbanks/governments having to engage in financial repression to help burn off the debt stock. Expect more Japanification of western cbank policy, he says.
