Private Credit: NDFI lending tightens, Apollo tries transparency, and HSBC gets pulled in!

Problems in the Private Credit Market continue to unfold as banks are now tightening lending standards around Nondepository Financial Institutions (NDFIs). As this is happening, Apollo Global Management is trying transparency by offering their investors daily valuations for their private-credit funds starting at the end of September. Most funds provide this information on a quarterly basis. Apollo is trying to calm down fears of larger credit issues within its funds. Meanwhile, HSBC is getting pulled into the Private Credit conversation through ‘back leverage’. When MFS failed in February (U.K. mortgage lender), investors were trying to figure out who was going to absorb the losses. Through a chain of special-purpose vehicles, HSBC turned out to be one of the most exposed banks and is now expected to take a $400 million dollar loss. HSBC made a loan to Apollo Global, which then lent the money to MFS. This episode examined two articles from The Wall Street Journal and one article from S&P Global Market Intelligence (subscriptions required).