March 26, 2026
By Peter Bower
The Lonely Bull and his partners noted when private credit firms wanted to begin offering participation to the public, it was a bad sign. This usually happens when institutional investors begin to see problems and diminished opportunities. So, “let’s offer it to the public. They will let us continue to grow and provide an exit for insiders.” This happened in the past with oil and gas and real estate deals. The early money got a way out at peak prices, and the new money was left holding the bag as the cycle turned.
It has become apparent that the loan portfolios of some private credit firms have some problems. Consider that the types of borrowers that would pay the high interest rates that these firms demanded were probably a little desperate. Otherwise, if their prospects were that good, they could obtain cheaper loans from banks or insurance companies.
Now, some private credit companies and their funds are awash in redemption requests. They cannot possibly meet all of these. The money has been lent for longer periods and can’t be turned back into cash quickly. In short, investors in these funds are stuck. If some of these portfolios have some bad loans, then they will participate in the consequences. Hopefully, the high interest rates charged will offset some level of losses. If the losses go beyond this, then the losses will be shared with all the fund holders.
Riverplace Capital saw through this game and never participated. Our experience told us that this outcome was likely. Quality is always important. We only invest in high-quality credits. You should, too. If you ever have questions about new or exotic deals that seem very attractive, call us. We may be able to help you. In the meantime, stay steady my friends.
-The Lonely Bull
