Tether, Fasanara launch $400 million fund for stablecoin-enabled private credit

Tether, the stablecoin issuer, is venturing into the private credit space through a partnership with Fasanara Capital. On September 9, the two companies introduced the StableFund, an "evergreen private credit vehicle" backed by $400 million in co-investment from both parties. This fund aims to attract up to $3 billion in institutional capital.

Tether highlighted that the private credit market is now worth approximately $3 trillion globally and is expected to reach $5 trillion by 2029, as demand for alternative financing and institutional exposure to real-economy lending opportunities grows.

The StableFund will primarily focus on funding small and medium-sized businesses, which face a global financing gap of $5.7 trillion. Tether's USD₮ coin will be integrated into small business and consumer lending flows across fintech platforms in over 60 countries. USD₮ was designed to be a universally accessible and frictionless form of currency.

Paolo Ardoino, CEO of Tether, stated that the company is well-positioned to source USD₮-linked financing opportunities and provide the necessary infrastructure for seamless cross-border lending. Francesco Filia, CEO of Fasanara Capital, emphasized that his company possesses the technology, origination relationships, and underwriting discipline to identify institutional capital for borrowers who traditional finance often overlooks.

Tether's unique contribution lies in its extensive stablecoin network, crypto-native investor base, and USD₮ rails that expand the reach of credit beyond conventional funding structures.

The private credit space has seen increased popularity, allowing lenders to access detailed operating information that public investors typically cannot. This trend includes factors such as cash forecasts, customer-payment behavior, borrowing-base data, collateral performance, and liquidity positions. This information is becoming a crucial aspect of an ongoing underwriting relationship, as these metrics move beyond internal management tools.

For CFOs, having access to trustworthy, granular, and up-to-date financial data can provide potential lenders with greater confidence in a company's financial health, while a lack of this information could leave creditors uncertain and "underwriting uncertainty."

The timing of Tether's entry into the private credit space is also significant, as concerns about rising defaults, asset markdowns, and investor outflows in the sector are becoming more apparent. The U.S. private credit default rate reached 6.1% in the previous month, according to recent reports. As lenders' own investors demand more stringent scrutiny of portfolio quality, borrowers may face increased scrutiny from potential lenders to address potential risks.