저자: Kevin · 외국인
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사모신용(private credit) 시장에서 부실이 확산 중이라고 주장. Apollo의 $170M 대출 전액 상각, BlackRock TCPC 순자산가치 19% 하향 및 주가 급락, 2025년 Tricolor·First Brands 등 연쇄 부도와 HPS 사기 사례 언급. PIK(현물상환) 증가와 BDC 주가 하락을 근거로 신용 긴축 사이클 진입을 주장. 환매 요구 증가와 401k 자금 유입 시도를 'exit liquidity' 목적이라 해석. 말미에 자산배분 7:3 주식·현금 조언에 동의하며 자신의 스타트업 투자 홍보.
다듬은 글
I don't know exactly how to pin it, but something is weird out there. We have not seen this since 2008. And I hate to say it, but I feel like I have to come here daily to talk about these comparisons to 2008. And I don't want to go back to 2008. That was a tough time for a lot of people, myself and my family included.
Well, take a look at this, folks. What is this? Apollo takes a 100% loss on quote protected loan. In other words, an assetbacked financing deal for a company Apollo, a private credit lender, lent to, got 100% wiped out despite what Apollo called was a loan that had quote downside protection. This is all happening now in the private credit market.
This just happened two days ago. I thought the private credit issues were like so 2025 and like you remember and first brands. We'll go through that in a moment. I'm like, "Oh, those private credit issues that's so 2025." No, we just had a whole another $170 million loan get written down to zero just yesterday.
So, it's not getting better. It's still happening. Of course, we keep getting told that everything is fine and not to worry. Yet at the same time, what's actually happening? Payments in kind are skyrocketing as they have been since interest rates started rising in 2022. We'll explain payments in kind in just a moment and why they're bad.
But even though these are going up, which is basically like, hey, I'll catch you later on my debt. Pick investments, payment and kind investments with bad picks. In other words, payment inkind loans that are already going bad. Like it's one thing if you're doing payment in kind. It means things are already going bad.
It's another thing. If the solution to something going bad is also going bad, and that's this chart over here, which is also up 61% over just the last 2 and 1/2 years and rising. So, it begs the question, what's going on? Is the International Monetary Fund right that these non-bank financial intermediaries are taking on massive over $3.4 4 trillion worth of risk and that the banking sector itself has about $500 billion worth of direct bank exposure even though technically they're not supposed to have any exposure.
And is this a problem now? And what does it mean to us? Because you know stock markets are like all-time highs. So I mean nobody must care, right? I mean after all the market's still growing for private credit. Look CNBC projects that the private credit market is going to grow from $3.4 $4 trillion up 44% to $4.9 trillion by 2029.
You know, that's the year that OpenAI is supposed to go profitable. We'll see if that actually happens, but it makes you wonder what's actually going on out there. Now, one way we can kind of tell or take sort of a sample look at what's going on is we could go look at public companies that are these business development companies or private uh lending entities that are public.
One of those, for example, has to do with BlackRock, which is historically known as the largest private lender or private credit producer in the world. Black Rockck has private debt fund called the TCPC BlackRock Capital Fund. Uh it's got about $443 million in AUM and you can see this massive move down from about $6 per share all the way down to $476.
Rebounded a little bit here. But it makes you wonder, wait, Kevin, I thought the private credit issues were like last September. You know, when Charlie Kirk happened on the same day as Tricirller, that was September 10th. And then the crazy 90 days that happened after that. Kevin, what possibly happened here?
I mean, you just told us that just yesterday Apollo wrote $170 million down to zero, which that doesn't really happen outside of, you know, 2008. Why all of a sudden is this stock crashing 17% in in one day? And yes, in fairness, it has rebounded a little bit, but why? Oh, well that was just because Black Rockck happened to say, "Hey guys, we failed our overcolateralization test." Uh, and therefore, we're going to just write down the net asset value of this business from $8.71 down to $7.7.
And that was as of the September 30th valuation. So, people were wondering, oh, it could be even worse. Now, they blame they were, you know, hit by an e-commerce aggregator. basically, you know, somebody who repackages stuff uh to sell on Amazon, kind of like institutionalized drop shipping almost. But anyway, they were given loans to that business.
They said there were protections against that business as well. That failed. So now you've got Apollo writing down $170 million stake just yesterday. You've got Black Rockck writing this down Friday, but it really didn't hit markets until yesterday because they wrote it down after the market closed on Friday, of course, to try to get people to forget about it over the weekend, but we didn't.
like, "All right, well, that's not good." So, I'm like, "Well, what what would have caused that kind of collapse in value at a Black Rockck fund?" So, I was looking at some of their paperwork and they're arguing, "Oh, well, it's because of Renovo Home Loans that collapsed, but that only represents 7% of their entire portfolio." So, if one business goes to zero and that only represents 7 of your portfolio and you're writing down 19% of it, that means a lot of businesses are going poopy dupy.
So the deeper you look, the more you see it's companies like Pluralsight and Astra Acquisition Acquisitions and other businesses that Black Rockck is lending money to because they don't really seem to care as long as new money can come in and cover up a world of sin through payment and kind loans. Nobody really cares.
The money keeps circulating and companies like Black Rockck keep getting their fees. In fairness, they are waving onethird of their management fees because they just had to write down the asset by 19%. Do you imagine if my startup I had to go, "Hey guys, we got to write everything down 19%." Man, you you'd be taking zero fees, not one like not twothirds of your fees by waving one/ird of them, right?
But I mean, look at this and and tell me this isn't sus because to me it thing it seems like things are getting worse, not better. Here's the 2025 bankruptcy and private credit timeline that I put together. So, we had the tririccolor collapse on September uh 10th after JP Morgan froze a $700 million warehouse line of credit.
Now, I I love taking the opportunity to dump on JP Morgan because I think they do a really bad job to their customers and they will throw you and feed you to the wolves to make sure that nothing goes wrong at that bank. And so, it doesn't surprise me that JP Morgan rugpulls people's credit lines and sends them into bankruptcy.
In fairness though, withricolor, it seems like honestly setting up some fraud. The Tricolor spreadsheet story is actually kind of a quick fun one to mention. Uh Triricolor was an auto lender that collapsed and they were telling their investors, don't worry, everybody is paying on time, but they forgot every single month when they were saying that everybody was current to update the spreadsheet that if everybody was current, the principal they owe on their loan should actually be going down.
And they never updated that column. So that's how Triricricolor ended up getting exposed because they sucked so badly at frauding that they couldn't even fix their own spreadsheet correctly. So I mean good on them for getting exposed. We want bad people to get exposed. But it's a fun tangent to mention that stable coins fix that.
It's something that we're working on with our startup where if you can get involved with using stable coins to prove like loan payments or whatever, then the end investor knows that the underlying pile of poopy isn't actually a flaming pile of poop because they could see that every single loan payment is being made on the public blockchain without revealing personal identifying information.
I actually just passed my NMLS test this morning. That's why I wasn't live this morning. Uh I passed. I did it. I actually passed it once like 10 years ago, but I let it expire. Anyway, that's just a tangent note. Stable coins can actually solve that. But back to private credit. How are things getting worse?
Well, after we have thericolor collapse on November 4th, we have the First Star development bankruptcy. Uh that's a $30 million loan got rugpulled. Wonder if it was JP Morgan again. And then that Ritz Carlton developer in Arizona goes bankrupt. Then you have HPS telecom fraud discovery that pops up on November 4th as well.
$400 million lent on just fake receivables. Fake receivables. These are people blatantly creating fraud right now. Uh and one of the reasons people are doing this, keep in mind, is because the days of cheap money are over. You can't paper over a bad business anymore with cheap loans because now the bills are coming due and that's what's making it harder for people to cover up their frauds.
Then you had the uh Sa Hotel bankruptcy. A bunch of people were getting evicted out of Marriott hotels because the whole chain that owned a bunch of these franchises went bankrupt. Worth knowing that if you ever stayed at Marriott, only about 2% of Marriotts are actually owned by Marriott themselves.
Kind of interesting to pay attention to. Uh, also one that's not on this list that it really should be, unless I missed it when I put this list together is d right here, right after the September collapse. Within 30 days of thericolor collapse, we had the first brand's collapse. Then we had Firstar Development.
Then we had the HPS $400 million fraud. Then we had Sa bankruptcy. Then we had this in January. You know, we're thinking, oh, 2026, the private credit issues are going to be over. Really? Nope. Let's slash our NAV 19% at Black Rockck. Then just yesterday, it's also not even on my sheet here, we got Apollo because while I was putting together this video, I'm like, "Oh my gosh, another one." As I'm putting together the framework for this video, I'm like, "This is weird.
This is very strange." Now, how do some of these frauds happen as interest rates go up? Here's just a quick anatomy of how the frauds work. And this has to do with the HPS fraud. So HPS Investments right here, this guy Bankham Brahmbot is alleged of having committed over $500 million of fraud and they always end up having a fall guy.
I just think it's funny that a bank is saying that Bankum is the fraud. I don't know sometimes, as Elon says, fate loves irony. But anyway, you make fake invoices. Basically, you go in QuickBooks, you make a bunch of fake invoices and emails, and you create fake identities, which you could probably do really well now with artificial intelligence, and then you use all that money that's supposedly going to come in to go get loans.
So, now you're using fake paper to get a real loan, and then you use that money to go finance your lifestyle, you know, big mansion in Ohio, like the first brand CEO, and a car collection, a private chef, you know, all that kind of stuff. the guys these guys are getting sued for now because they're misappropriating corporate funds.
But this is how it happens. Uh and then of course, you know, oftentimes you end up moving some of your assets offshore. Somebody was asking me the other day like, "Wow, I didn't know the Cayman Islands had so many treasuries." The reason the Cayman Islands has so many US treasuries is not because all of a sudden the Cayman Islands are really rich.
It's because, you know, shysters are trying to I'm not saying everybody in the Cayman Islands are shy. I'm just saying some people who are shysters like to move their money outside of the United States where they can be um maybe a little less regulated, but it all ends up getting fined out eventually, hopefully at least.
But remember, this market, it's still cranking right now, and that's the weird thing. So at the end of 2025, this data goes all the way through November of 2025. It's the latest we have available, we were on pace to have more private credit issuance through collateralized loan obligations for these sort of shy companies than what we saw in 2024.
Up by about 11% was the pace. Kind of remarkable. And companies well that are public uh are starting to see some of the pain of uncertainty in the space. See, it's not just the Black Rockck fund here, but you could also go to Blue Owl. I mean, let's go look on the week basis. This is Blue Owl, big finance here for Meta's data center.
They're trading for a fraction of their book value. So, the price to book on this one is about they're trading for about a 22% discount on this one. Looking at their price to book ratio here at 78. Blue Capital over here, uh, is trading at about probably about a 30% discount. See the difference here over time.
This is the Black Rockck Fund. This is the week chart. So, you can see a lot of these have just been coming straight down. Here's another one. FSK Capital Corporation also coming off highs. And here's one more. Prospect Capital just coming straight down. So, a lot of these more like arcane tickers are starting to show real problems and oopsy dupsies because the market's going, you know what, it's time to get our money out of this.
And so people are wondering, Kevin, who is funding all this kind of stuff? Well, it's not Asians, at least according to the Wall Street Journal. See, the Wall Street Journal is saying that there are now a large number of investors trying to get their money out of these funds. Look at this. The Wall Street Journal said one fund managed by Blue Owl got redemptions for 15% of its shares primarily from Asian clients.
And take a look at this right here. For the first time since the start of the private credit boom, large numbers of individual investors are trying to get their money out. Several of the biggest funds eligible to wealthy individuals received requests from about 5% of shareholders to cash out at the end of last year, well above normal.
Now, the reason this 5% number is so important is because that's usually where the caps are. So, keep that in mind. There are a few different ways you can invest in a company. If you invest into, you know, like a startup, just as an example, it's not a pitch, but let's say you if you invest into a company like a house hack, you put your money in, your goal is for that company to IPO at some point in the future or there's some kind of acquisition, you make your money on that, right?
That's the goal. Obviously, it's never a guarantee. That's different. Like investing in a startup like the artificial intelligence startup that we run, Houseack.com, you can check it out. Uh that's different from investing in a fund. When you invest in one of these private credit funds, companies like Black Rockck say, "Hey, you've got about a 5% limit of people who can withdraw.
So that way, Black Rockck can put aside 5% in cash. If people want to withdraw their money, they just have to give 5% back. And you can do that usually once a year. And there's often a quarterly limit as well, like 1% a quarter or 5% total for the year, something like that. The reason for that is they don't want to have to go all of a sudden liquidate all of their assets because if they did that the whole Ponzi would come down or investment, you know, not necessarily calling it all a Ponzi, I'm just saying some things are starting to look a little sussy.
And so as people get to that 5% cap, a year after year after year, these funds shrink in size and now private credit's like, crap, what can we do to get more money? Oh, I know. Why don't we hit up Donald Trump with a great idea? Hey, Donald Trump, let's start getting 401k investors, so basic normal American human beings who are hardworking Americans to start putting their retirement money into private credit because these because these quote unquote smart money people are cashing out and in my opinion, this part's my opinion right here, they need the exit liquidity to keep the scheme going.
But that's exactly what's happening. So if you're seeing in the news, oh, Donald Trump's trying to get people exposure to private credit markets, it's not to benefit you, it's to benefit his cronies. Anyway, just saying something to keep that in mind. You always kind of want to follow the money. Problem is, like we mentioned at the beginning of the video, we're seeing this surge in payment inind deals.
Now, this surge up 44% in 15 months is bad. And remember one of those Prospect Capital or FSK KKKR Capital, we saw those stocks declining off some of their highs. The reason I put these on this list here is because they hold a lot of this pick risk. So if you go back to the video where I talk about those ticker symbols, watch those tickers.
Those tickers are a big deal because the worse they get, the worse this private credit problem is. Now, you might wonder, "Okay, Kevin, I still don't really understand what a pick is." No problem. No problem. So, I put together uh this, which I uh I got to give credit to the Wall Street Journal for.
Here's how a pick works. Sorry, no, this was actually in Bloomberg at the lender's office. The lender says, "You owe us $2 million in interest on your loan. Just in interest." And then you go, "Uh," while you're sweating, "Uh, sir, sir, I I I don't have the cash. I can't make the payment." The lender says, "No problem.
We'll just add that $2 million to your final new bill in the form of more debt. Great for now. It doesn't really matter if they pay with cash or additional debt. We still count this as income on our books. So, in other words, they just created a new loan or a new set of funny money. They got their payment of $2 million and they're like, "Hey, our fund's still making money, so we still get to collect the fees." So that's why when you hear payment in kind where people are basically borrowing to make their payments uh or uh they're giving away equity or whatever, it's a sign of a destabilizing market.
We started seeing these picks grow after interest rates spiked in 2022. That's when we started getting hikes coming up over here right about here in Q1 2022. This is when the hikes stopped and now the bills were coming due, you know, cuz it wasn't really the initial part. Everybody was able to get through the initial part, but now all the refinances are happening where people are like, "Crap, now we actually have to pay the higher interest rates." This is why the Federal Reserve says they're long and variable lags in interest rate policies.
They increase rates in Q1 of 22. Here we are in Q1 of 2026, 4 years later, and we're just starting to see the fallout of this private credit disaster. And it's no surprise why Black Rockck uh or or sorry the Bank of America fund manager survey is concerned that one of the largest issues their top three issues that we have in markets today Japanese government debt this is the carry trade issue hyperscaler AI spending and the top actually number one issue right now that fund managers worry about with a 39% ratio it's private credit the problem is you have to see all of these as related the same institutions that are borrowing in Japan to give money to these companies are the same American companies that are doing these private credit loans.
Not always, but often. Those same businesses are also lending money to the hyperscalers, specifically like Blue Owl to go build Meta's data center and raising debt for that. Nobody cares what consumer sentiment is or where the consumer is because that's not going to be the source of the problem. It's going to be private credit, capex, and Japanese government debt.
that lack of a tailwind. We had so much blowing before, now there's a whole lot less blowing. Those are the problems we face and this is risky. So, how do you solve this issue? Okay, I'm going to give you my opinion of how this all plays out. Uh, I want to quickly mention two things. Tomorrow is my birthday.
So that does mean, as you already know, the coupon code for the meet Kevin membership, the alpha report we do every morning on trade advice almost every morning when the market's open, the nine courses, everything on how to save money on taxes or long-term real estate investing or fundamental analysis, our whole stocks course.
You get that at me.com. Uh, and then of course our reinvest AI coupon expires tomorrow for that. If you want to invest in this very business, remember we do have this open. It's . This uh video is not a solicitation. If you want to read the solicitation is right here. It's called the offering circular.
I highly recommend you read that. Uh you get 5% yield through conversion and then you have stock in the company which obviously my job and my goal is to grow that as much as possible. So check that out at houseack.com. Now with all of that said, what's my opinion on this? All of this is a harbinger that we are in a credit tightening cycle and the credit tightening cycle is just beginning.
So we are still enjoying the high of easy money low lockins and that's I think why the stock market is still doing so well. It's going to take time but over the next few years we're going to see that credit expansion slow. That is going to be a negative for growth in America. And it's not ideal. And so that's actually where I agreed with a I'm shocked I'm saying this, but I actually agree this uh this what's it called?
Um where is it? Oh, I just saw it. It was like a CM. There it is. I found it. Forget the 6040 portfolio. This investor is 7030 cash. I don't pay for this pro thing, but like I saw this headline. I'm like, I totally agree because bonds are getting smoked right now, which is usually your 40 mostly because of Donald Trump's inflationism and higher for longer and all that.
Stocks good, fine. You know, things are going up. 70% stocks over here. Okay. Cash instead of 40 being bonds, they just say, you know what, go 70 stocks instead of 60. So, put a little bit more. And over here on the 30 side, we're going to go cash. I love that. I think that is great advice. 7030. What's actually remarkable is my real estate startup is about 30% cash right now.
Yeah. Before I saw that, I'm like, huh? Yeah. Well, because I want to survive, you know, like I don't know when all this stuff is going to hit ahead. But when it does, I don't want to go down. I want to be here for the next 50 years going making YouTube videos going you can invest in house hack see that that would be an honor uh if if uh if we could do that in 50 years you know but you got to you got to have a long-term reputation to do that. Uh all right folks .
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