It's Not 2008: Morgan Stanley Counters Why Private Credit Risks Are Not Systemic

By Vishwanath Tirupattur, global head of Quantitative Research at Morgan Stanley

Anxiety around private credit is building. The sell‑off in public BDC equities has continued, alongside a clear pickup in redemptions across private BDCs and semi‑liquid private credit funds. Gates are being tested, and familiar fault lines — software exposure foremost among them — face increasing scrutiny. The market’s unease is understandable: After years of outsized inflows and unusually smooth returns, private credit is now being stress‑tested in real time. While emerging credit risks need to be taken seriously, it is critical to distinguish credit risk from systemic risk. Today’s dynamics look far more like a pricing and sentiment reset than the beginning of a disorderly credit unwind with broad systemic consequences.