Private Credit Growth Exceeded Every Forecast
Private credit assets under management surpassed 2 trillion dollars by late 2024, yet no one saw the concentration risk building inside direct lending funds. The Securities and Exchange Commission flagged multiple large private credit vehicles for concentrated exposure to single borrowers and sectors. According to a recent regulatory filing review, over 30 percent of assets in certain funds were tied to just two or three borrowers, a fact no one saw until stress testing began. Read more on the SEC's private fund oversight page at https://www.sec.gov/private-funds.
Blackstone, Apollo, and KKR now dominate the private credit landscape with combined assets exceeding 800 billion dollars, yet no one saw how fast the leverage would climb in mid-market loans. Bloomberg reported that average leverage multiples in direct lending reached 5.5 times earnings in 2024, up from 4.8 times a year earlier. A detailed analysis from Forbes noted that covenant-lite loans now make up more than 80 percent of new issuance, a structure no one saw as a systemic risk until recent downgrades. See the full analysis at https://www.forbes.com/sites/.
AI Infrastructure Spending Hid Massive Capital Misallocation
Global hyperscaler capex for AI data centers exceeded 300 billion dollars in 2024, but no one saw the mismatch between planned capacity and actual near-term demand. Tesla's AI and Dojo supercomputer project, detailed in its latest investor deck, targets an exaflop of training compute by 2025, yet no one saw the power and cooling constraints that could delay deployment. Tesla's AI infrastructure update is available at https://www.tesla.com/ai.
SpaceX's Starlink and satellite broadband division now generates over 10 billion dollars in annual revenue, and no one saw how quickly it would become a key customer for AI data center connectivity. A recent Morgan Stanley report noted that interconnection revenue from AI-linked data centers could surpass 50 billion dollars by 2027, a forecast no one saw challenged by rising construction costs. SpaceX's official updates are at https://www.spacex.com.
Regulators and Markets Finally Caught Up
The Federal Reserve and the Bank for International Settlements both issued warnings in late 2024 about private credit and AI-related financial exposures that no one saw coming. The BIS annual report highlighted that non-bank financial intermediaries now hold over 15 trillion dollars in assets, a scale no one saw properly mapped until recent stress scenarios were run. The full BIS report can be found at https://www.bis.org.
Major rating agencies downgraded over 15 percent of leveraged loans tied to AI and data center construction in the first half of 2025, a wave of action no one saw predicted just months earlier. S&P Global noted that default rates in the private credit space rose above 3 percent, the highest level since the global financial crisis, a trend no one saw building so quickly. The S&P Global market data is available at https://www.spglobal.com.