By Alexander Saeedy
JPMorgan Chase Chief Executive Jamie Dimon has long been skeptical of private credit. Lately, he has been getting a reminder why.
Blame it on the " Saaspocalypse." Private-credit managers are facing an ongoing reckoning as individual investors stampede out of private-credit funds, worried about a downturn in software, a number of high-profile defaults and restrictions accessing their money. Managers have had to enforce limits on redemptions, with Apollo Global Management being the latest to see large withdrawal requests on Monday.
Dimon recently ordered a full-scale inspection of the bank's loan books for exposure to software companies. Many unprofitable software companies have borrowed risky loans from private-credit funds over the years, and earlier this year, JPMorgan told some funds that it was restricting their access to credit based on their exposure.
More recently, the bank created new strategies for hedge funds and other investor clients to bet against companies with exposure to private credit.
Since the 2008-09 financial crisis, private credit has been taking market share from the big banks, and Dimon has been among those warning about potential dangers lurking in the unregulated industry.
Now, JPMorgan and other banks are paring back risk and sensing opportunity from the weakness of private-capital firms that are simultaneously their clients and competitors.
"They're all our clients, but I'm shocked that people are shocked," Troy Rohrbaugh, co-CEO of JPMorgan's commercial and investment bank, said last month about the continuing pressure on private-credit funds.
Bankers aren't dancing in the streets. The private-capital firms are among the biggest fee-payers on Wall Street, and banks including JPMorgan and Goldman Sachs have lent billions of dollars directly to private-credit funds and unrolled initiatives of their own to get in on the action.
The complicated relationship has led to a few awkward missteps. Along with JPMorgan, Bank of America had created a strategy for some clients to bet against stocks with exposure to private credit. But the bank quickly retracted it and apologized for the idea, with its research analysts later attributing the continuing downturn to "media attention."
"This is a hyper sensitive topic," said Mike Mayo, a bank analyst at Wells Fargo. "But the disruption might give banks a chance to play offense against the competition."
Tangled up in the private-credit concerns are broader fears about software companies being replaced by artificial intelligence. JPMorgan estimates that software debt accounts for around 30% of all private-credit loans outstanding, while bank-originated debts hover around 10%.
So far, all their stocks have taken a hit.
Shares in alternative asset managers like Blue Owl, Ares and Blackstone have dropped some 30% or more since the beginning of the year, while S&P's Software & Services Select Industry Index is down 20%. Bank stocks have taken a beating too, with the KBW Nasdaq Bank Index down 8%.
Searching for 'cockroaches'
JPMorgan's ties to the private-credit industry have never been simple.
Dimon has been skeptical of the private-credit boom but also allowed the bank to wade deeper into it to ensure it didn't lose out on fees and deals from big private-equity clients. JPMorgan now has $50 billion of its balance sheet committed to making private loans to clients.
Dimon, who last year suggested there were "cockroaches" hiding in the financial system, has been tracking risk in the private-credit markets for years, with bankers regularly providing him updates on troubled fund managers, people familiar with the matter said. His concerns expanded more recently as advances in artificial-intelligence tools left investors wondering if they could render swaths of the software sector obsolete.
"You'd be shocked about what these guys have already been through on software -- loan by loan, name by name, to look at what it means for us, trying to forecast it forward," Dimon said at an investor update in February.
Other banks have also recently launched fresh examinations of exposure to private credit including reviewing loan portfolios and collateral advance rates, The Wall Street Journal has reported.
As a sign of how the banks are on both sides of the problem, JPMorgan has faced hurdles as it tries to sell billions of dollars of loans and bonds for tech companies affiliated with Silver Lake, a major private-equity firm.
The bank recently decided to wait to sell around $5 billion in debt for Qualtrics, a cloud-based subscription-software platform, people familiar with the matter said. Investors are asking for reams of statistics proving that customers aren't going anywhere before committing new capital, which the company is still preparing, the people said.
At JPMorgan's leveraged finance conference in Miami this month, investors raised concerns about artificial intelligence related to the megabuyout of videogame maker Electronic Arts.
However, as bankers launched the sale of $8 billion in EA bonds on Monday, investor demand remained high and bankers argued the likelihood of AI replacing a videogame studio with multiple licenses with athletic leagues was low, people familiar with the matter said.
JPMorgan accelerated the sale plans and hopes to close by Tuesday, one of the people said.
Write to Alexander Saeedy at alexander.saeedy@wsj.com
(END) Dow Jones Newswires
March 23, 2026 21:33 ET (01:33 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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