{
  "id": 18089894,
  "title": "Hedge funds flag growing private credit risks amid rising rates",
  "url": "https://urgent.news/2026/11/04/hedge-funds-flag-growing-private-credit-risks-amid-rising-rates",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-11-04T08:03:52.000Z",
  "source": {
    "name": "The Business Times - Companies & Markets",
    "slug": "the-business-times-companies-markets",
    "url": "https://www.businesstimes.com.sg/companies-markets/banking-finance/hedge-funds-flag-growing-private-credit-risks-amid-rising-rates"
  },
  "original_language": "en",
  "account": "Hedge funds are raising alarms over the escalating risks in private credit amid increasing interest rates. Tony Yoseloff, chief investment officer of Davidson Kempner Capital Management, highlighted at the Global Financial Leaders’ Investment Summit in Hong Kong that private credit is encountering more challenges than the public market due to higher borrowing costs, slowing business expansion, and a large amount of debt maturing in 2027 and 2028. Yoseloff noted that approximately one-third of US private credit loans have migrated from private equity to the software sector over recent years. He emphasized that the private credit industry's growth, while substantial, is accompanied by significant risks, including vulnerability to artificial intelligence (AI) disruptions and concerns about overvaluation. John Aylward, CIO of Sona Asset Management, pointed out that the five-year average default rate in the syndicated loan market has already surpassed levels witnessed during the 2008 financial crisis, indicating heightened caution in the sector. Both Yoseloff and Aylward underscored the unique risk profile of private credit, characterized by smaller and riskier companies compared to their public market counterparts. Investors are keenly monitoring private credit funds for potential risks as companies burdened with debt before the rate hikes face challenges in refinancing. Davidson Kempner, which manages its investments globally, sees a diverse range of performing credit opportunities, particularly in Asia and convertible bonds. Farallon Capital CIO Nicolas Giauque pointed out that their credit allocation has improved following years of reduced exposure, primarily due to the AI trade and US interest rate hikes, generating opportunities in lower-rated debt. However, Giauque cautioned against relying solely on index-level hedges to mitigate systemic risks, citing the recent market correction's disproportionate impact on sector-level indices.",
  "summary": "Concerns have intensified as borrowing costs climb, fanning fears about the sector’s AI exposure",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 2,
    "also_reported_by": [
      {
        "outlet": "Private Equity Wire",
        "title": "Hedge fund executives warn of mounting private credit risks",
        "url": "https://urgent.news/2026/11/04/hedge-fund-executives-warn-of-mounting-private-credit-risks",
        "published": "2026-11-04T10:11:02.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}