JPMorgan Chase, Goldman Sachs tighten lending to private credit funds
Wall Street banks are tightening lending terms for private credit funds, raising pressure on an industry already grappling with investor withdrawals and growing scrutiny over asset quality, according to a Bloomberg report.
For years, large banks provided private credit funds with substantial back leverage — loans secured against portfolios of private debt — helping managers boost firepower and enhance returns. But that dynamic is becoming more restrictive as market volatility rises and lenders reassess their risk exposure.
Bloomberg reported that banks including JPMorgan Chase, Goldman Sachs, and Barclays are increasing interest rates on these facilities and marking down individual loans posted as collateral, prompting some fund managers to swap assets out of collateral pools to avoid steeper hits.
The shift reflects a broader effort by banks to protect themselves as concerns mount over private credit performance, especially in sectors vulnerable to artificial intelligence disruption and weakening corporate earnings. JPMorgan Chief Executive Jamie Dimon said the bank has long maintained the right to review and mark underlying collateral. “Every bank does it differently and every bank charges differently,” Dimon said. “We always had what we call marking rights to look at the underlying collateral. And that’s just a right that protects you.”
Tightening is affecting a market that has grown to about $1.8 trillion in private loans. Because many funds use leverage to support liquidity and enhance returns, higher funding costs can directly squeeze performance. Some banks are now charging more than 3 percentage points over the Secured Overnight Financing Rate benchmark, representing increases of 50 to 150 basis points, according to people familiar with the arrangements.
The report also highlighted the scale of bank exposure to the sector. Based on earnings disclosures cited by Bloomberg, major U.S. banks have roughly $180 billion of exposure to private credit firms, including about $50 billion at JPMorgan, $36.2 billion at Wells Fargo, and $22 billion at Citigroup.
While banks are seeking stronger downside protection, they are also trying not to undermine a business that remains profitable and strategically valuable. Still, Bloomberg said more cautious underwriting, tighter collateral terms, and rising leverage costs could further weigh on returns, drive additional redemption requests, and add pressure to private credit asset prices if the trend persists.
