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Private Credit Tightens Up; Blackstone Investors Yank $4.4 Billion
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Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Friday, June 5. In today's briefing, a changing tide in private credit is tightening up lending standards.
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Michael Nagle/Bloomberg News
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The anything-goes era in private credit is coming to an end. Private-credit firms are tightening their lending standards, increasing interest rates and other fees they charge on new loans, restraining how much debt they give borrowers and closing loopholes that allow financing to be taken out against borrowers’ assets.
The tighter standards mark a sharp reversal from recent years when a rapid growth of private credit fueled competition, leading lenders to offer sweeteners and generous terms to win deals.
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"One of the benefits of the noise in the market and some of the outflows in wealth is you’re seeing less competitive pressure in the market. So it has gone from maybe a borrower-friendly market to a lender-friendly market. And that’s a good place to be.”
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Michael Arougheti, chief executive of Ares Management
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Blackstone investors ask to pull $4.4 billion from direct-lending fund. Investors in Blackstone's flagship private-credit fund, known as Bcred, asked to redeem 10% of their shares in the second quarter, amounting to some $4.4 billion. Blackstone will limit redemptions from the $79 billion fund to 5%, a reversal from its strategy in March when it opted to pay the full amount requested.
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Tayfun Salci/Zuma Press
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Lex Greensill banned from U.K. boards. The financier whose eponymous lending firm collapsed in 2021 was banned by U.K. regulators from serving on company boards.
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Thursday’s nine-year ban by the Insolvency Service, a government agency that investigates failed companies, is the first formal punishment of the Australian financier over the bankruptcy of Greensill Capital. The firm’s unraveling ricocheted across the financial world, especially on now-defunct Swiss bank Credit Suisse, which had sold loans by the firm to its clients.
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