Apollo, KKR, BlackRock, Carlyle: Private Credit Leaders Face Washington's Scrutiny

Congress is pressing major private equity firms—including Apollo Global Management, KKR & Co., Carlyle Group, BlackRock and Blue Owl Capital—for detailed disclosures on their private credit operations.

The U.S. House Financial Services Committee wants info on sales practices, leverage, fees, incentives, audits, risk management, and potential economic vulnerabilities, according to Bloomberg.

This news comes as the private credit sector has experienced significant volatility in recent weeks. Rising rates, tighter liquidity, and a broader risk-off environment have combined to squeeze a corner of finance that expanded rapidly during the easy money era. 

Oaktree Capital Management elected to fully satisfy all redemption requests, representing 8.5% in its private credit fund for the first quarter. 

Meanwhile, Morgan Stanley (NYSE:MS) curbed redemptions after investors sought to withdraw nearly 11% of shares from its North Haven Private Income Fund and JPMorgan Chase & Co. (NYSE:JPM) has begun restricting lending to software companies in its private credit funds. 

BlackRock Inc (NYSE:BLK) limited withdrawals from its $26 billion HPS Corporate Lending Fund after redemption requests surged to 9.3% of the fund’s net asset value.

Earlier this week, Federal Reserve Chair Jerome Powell noted during a talk at Harvard University that the turmoil the private credit sector has seen in recent weeks is not indicative of a broader risk to the financial system.

Powell added that the $3 trillion private credit industry is a "relatively small slice” of the asset pool and is something that the Fed is watching “super carefully,” MSN reported.

“I'm reluctant to say anything that suggests we're dismissive of the risk but we're looking for connections to the banking system and things that might result in contagion. We don't see that right now,” he said. “What we see is a correction going on and certainly they'll be people losing money and things like that, but it doesn't seem to have the makings of a broader systemic event.”

Meanwhile, CNBC's Jim Cramer took to X.com over the weekend to warn anyone with exposure to the private credit market.

"Unlike the housing/mortgage crisis in 2007-8, there is a solution to the private credit situation: take the hit. The vast majority of companies are solvent so sell them, take some losses," he said. "Don't get Dead!"

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