Private Credit Crisis Is Not The 2008 Subprime Crisis

Oriental Trader1.77K FollowersFollow5ShareSavePlay(17min)CommentsSummaryBlue Owl Capital (OWL) and its BDC OBDC exemplify the rapid growth and leverage-driven returns in private credit.OBDC's 11% ROE is largely fueled by leverage; unlevered returns would approximate high-yield bonds at 8%.Private credit risks appear more contained than 2008 subprime, but leverage and retail access warrant heightened caution.I do not recommend new investments in OWL, OBDC, or similar private credit vehicles given cycle uncertainty and risk of permanent capital loss. Ildo Frazao/iStock via Getty Images Earlier this week, the Federal Reserve reportedly asked US banks' about their exposure to private credit. Recent developments in the private credit market are compared by some analysts to the subprime market while otherThis article was written byOriental Trader1.77K FollowersFollowFocus on trying to piece together the big things (both at a macro and industry level) Twenty years in Asia (mainly China).Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.