A major Wall Street financial institution is working to transfer risk associated with over $4 billion in private equity fund loans, according to a Friday report from the Financial Times citing sources with knowledge of the situation.
JPMorgan is reportedly negotiating with investors on a deal that would allow the bank to shift risk related to ‘net asset value loans’ that are secured by private equity fund holdings, according to the report.
The news outlet’s report could not be independently confirmed by Reuters. When contacted for comment, JPMorgan did not provide an immediate response to Reuters.
Market confidence in private credit has declined over recent months as worries grow about relaxed lending practices and the possibility that artificial intelligence could disrupt the software industry — an area where many funds have significant exposure.
According to the Financial Times, the major bank is developing a risk transfer mechanism that would keep the NAV loans on its books while moving some potential losses to outside investors.
