Dimon Says ‘There Could Be Hell to Pay’ If Private Credit Sours

Dimon Says ‘There Could Be Hell to Pay’ If Private Credit Sours

(Bloomberg) — Jamie Dimon said he expects problems to emerge in private credit and warned that “there could be hell to pay,” particularly as retail customers have access to this booming asset class.

Most read on Bloomberg

“Would you like to give retail customers access to some of these less liquid products? Well, the answer probably is, but don’t act like it’s risk-free,” the JPMorgan Chase & Co. CEO said Wednesday at an industry conference. “Retail customers tend to drive around the block and call their senators and congressmen.”

JPMorgan and other lenders are competing in the $1.7 trillion private credit industry, and giants such as Apollo Global Management Inc. are moving into bigger and bigger deals. But banks have sought to make their own inroads: Dimon’s company has set aside more than $10 billion of its own balance sheet for direct lending and is setting up a co-lending partnership. Its asset manager is also looking for a private lending company, Bloomberg reported last week.

Dimon said Wednesday that his company wants to be product agnostic in its lending to customers and that his company also banks many key private credit stores. Some players in the industry are “brilliant,” he said, but not all, and market problems are often caused by the “bad” ones.

Never miss an episode. Follow The Big Take daily podcast today.

The longtime CEO wrote in his annual letter to shareholders that the private credit industry has not yet been tested by bad markets, which tend to reveal “weaknesses in new products.”

“I’ve seen a few of these deals that were rated by a rating agency, and I have to admit it shocked me to see that they were rated,” Dimon said Wednesday. “It reminds me a bit of mortgages.”

Read more: JPMorgan seeks private credit firm to expand in hot sector

Most read from Bloomberg Businessweek

©2024 Bloomberg LP

Source Reference

Latest stories