Private Credit Faces Redemption Pressure | Open Interest 4/2/2026
Speakers
Summary
- Geopolitical tension remains the primary market driver. President Trump's speech offered no clear de-escalation timeline for Iran, leading to a risk-off move into the weekend with equity futures down and oil prices spiking.
- Private credit faces significant redemption pressure, exemplified by Blue Owl capping withdrawals after a 41% redemption request spike in a tech-heavy fund. The issue is framed as concentrated in specific "vintages" (pre-2022) and sectors (software), not a systemic crisis.
- Oaktree's Armen Panossian argues the core problem is excessive risk-taking in software lending during the low-rate era, now exposed to AI-driven disruption. He warns mark-to-market losses may not be over and expects a prolonged, orderly correction, not a fire sale.
- A key risk to private credit is leveraged providers (e.g., banks) becoming nervous about software credit losses and pulling financing, which could force asset sales or require equity solutions.
- Despite headline volatility, the S&P 500 has been relatively resilient, down only ~4% year-to-date amid the conflict. Strategists note earnings estimates have continued to rise, supported by AI-related capital expenditure.
- Goldman's Ben Snider states the market's primary focus remains AI investment spend, which is continuing despite geopolitics. He sees opportunity in solar energy and infrastructure due to AI power demand and a need for energy supply resilience.
- HSBC's Racquel Oden sees a buying opportunity in tech, citing a dramatic compression in sector P/E multiples from 36.7% to 21.7%. She advocates looking beyond the "Mag 7" to the broader "493" companies in the S&P.
- Tesla's Q1 deliveries of 358k missed estimates (372k), continuing a trend of slowing growth in its core auto business. Commentary suggests the stock's valuation is increasingly divorced from automotive execution.
- Multi-strategy hedge funds (e.g., Exodus Point, Balyasny) posted heavy losses in March, failing to provide uncorrelated returns during the volatility spike, with some funds down 4-4.5% for the month.
Trade Ideas
Snider identifies "solar energy and other parts of the energy and infrastructure complex" as an attractive place to invest. He links this to AI/data center power demand and the need for more investment in "energy supply resilience" due to the conflict. AI is creating a structural increase in power demand. The Middle East conflict highlights vulnerabilities in energy supply chains, which will likely drive more investment in alternative and resilient energy sources like solar. This theme has been attractive for years, but the recent conflict adds a new, powerful catalyst for investment, making it a compelling opportunity. A rapid de-escalation in the Middle East and a sharp drop in oil prices, reducing the immediate urgency for energy resilience spending.
Panossian states the problem in private credit is concentrated in pre-2022 "vintages" where ultra-low rates led to excessive risk-taking, particularly in software lending. He warns that AI (agentic AI) poses a "binary" displacement risk to legacy software companies, making losses "quite severe." Software was a "darling sector" for private credit during the low-rate era. Post-ChatGPT, the risk of AI disrupting these legacy business models was not priced in. Funds with high software exposure (30-40% of portfolios) are seeing meaningful outflows and trade at steep discounts. The "hurdle is very, very high" to invest in software companies now. They must be "winners in a post-AI world." Oaktree avoided these recurring revenue loans as they were not appropriately compensated. A crisis of confidence leading to leveraged providers (banks) pulling financing from these vehicles, forcing distressed sales.
Oden explicitly states, "I'm focused on Tech." She cites a dramatic repricing, with the tech sector P/E multiple falling from ~36.7% at the start of the year to 21.7%. The selloff has created a "great opportunity" as the long-term earnings story for tech remains strong, driven by AI. She notes a broadening beyond the "Mag 7," with the "Forgotten 493" showing stronger earnings performance. The valuation compression combined with sustained AI-driven earnings growth makes tech a buy. "This is a great opportunity." A sustained conflict leading to a recession, which would force a reassessment of all earnings predictions.
Up Next
This Bloomberg Markets video, published April 02, 2026, features Ben Snider, Armen Panossian, Racquel Oden discussing SOLAR, PAVE, BIZD, XLK. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Ben Snider, Armen Panossian, Racquel Oden · Tickers: SOLAR, PAVE, BIZD, XLK