Simon Jack

But they are lending money at a pace to lots of companies.

And the fear is, is that some of the money that goes into these funds, which then gets lent onto business, is borrowed in the first place itself.

So you have what they call, you know, the debt is leverage, they call it.

And so you've got this layer cake of leverage, leverage upon leverage.

And when you have all those things going on, they can interact in really unpredictable ways.

Leverage upon leverage upon leverage.

So you've got private credit, which is misunderstood, poorly regulated, pretty opaque, quite complex, and very likely highly leveraged.

And it's never been tested, this new market, through a distressing time, which is what we potentially have now.

No, there are some institutions like pension funds who'll put a bit of money into private credit.

But there are also retail investors, particularly in the U.S.,

who will say, oh, I'm going to put some money into that.

And that's where the stress has been.

We've seen that because there's a couple of them, Blue Owl, BlackRock, Apollo.

These are quite big names in the US.

And some of them have retail investors who've seen some of these scares and now want their money out.

And what we've seen is it's a bit like a slow motion run on a bank.

They want their money out.

But the point is, is that the money they want out has already been lent to somebody else.

That's what leverage is.

And just like a bank.