Fund Seen As "First Domino In Private Credit Bank Run" Hit With Over 7% In Redemptions

Less than a month ago, when the latest, SaaS-driven meltdown in Private Credit was just starting, Rubric Capital, a hedge fund founded by a former Point72 manager David Rosen, wrote a private letter (available here to pro subs) to their LPs saying private credit is a fraudulent bubble. 

"Our key takeaway from this behavior is that distribution cuts are so worrisome that some bad actors are playing Enron-like accounting games" the letter claimed, noting that similar to Lehman's Repo 105, the firms are using repo-like loans from one particular investment bank to mask debt. It also warned that as a result of extremely easy underwriting standards, BDC leverage had increased to 8.5x of EBITDA, while 43% of private credit borrowers have negative free cash flow, a striking statistic.