Keep pulling the thread on Jeffrey Gundlach.
Jeffrey Gundlach stated in early April on X that the private credit market is currently in a state analogous to 2007 before the global financial crisis.
A specific private credit fund, which was previously marked at 100, experienced an overnight markdown to 81 last fall.
Jeffrey Gundlach predicts that redemption requests from private credit funds in June will be higher than they were in March.
Private credit firms are increasingly targeting retail investors because they have reached the limits of capital they can raise from institutional investors.
Jeffrey Gundlach believes a U.S. government bailout for a private credit crisis is unlikely due to the political difficulty of justifying support for wealthy investors.
Jeffrey Gundlach predicts that long-term interest rates will continue to rise, and will rise even faster in the event of a recession.
To hedge against a potential government-forced coupon reduction, DoubleLine Capital has repositioned its Treasury holdings by swapping into the lowest-coupon bonds for each maturity, reducing its long-bucket average coupon from 4.75% to 1.5%.
Jeffrey Gundlach predicts that the Federal Reserve will not cut interest rates in the current year.
The non-guaranteed mortgage market grew to approximately $2.2 trillion before the global financial crisis, a size Jeffrey Gundlach compares to the private credit market today.
Intermediaries selling private credit products have been paid billions of dollars in commissions by the private credit firms.
The unwinding of the private credit market is expected to be slower than the subprime mortgage crisis because private credit funds report on a quarterly cycle, unlike the daily pricing available for subprime via the ABX indices.
Jeffrey Gundlach recommends a 20% cash position in investment portfolios to hedge against a potential market implosion.