Blackstone Leaders Dismiss Private Credit Concerns Amid Recent Bankruptcies

Blackstone Challenges Private Credit Narrative

Blackstone executives have strongly refuted attempts to link recent corporate bankruptcies to the private credit market, with CEO Steve Schwarzman characterizing such connections as “misunderstandings and misinformation,” according to the firm’s third-quarter earnings call. The comments come amid market scrutiny following high-profile failures including auto lender Tricolor and auto-parts manufacturer First Brands, which JPMorgan CEO Jamie Dimon reportedly referred to as “cockroaches.”

Blackstone Challenges Private Credit Narrative
Bank-Led Credits Identified as Source
Isolated Incidents Amid Strong Credit Performance
Credit Dominates Asset Management Strategy
Market Conditions and Future Outlook
Performance Metrics and Investor Appeal

Bank-Led Credits Identified as Source

Sources indicate that Schwarzman specifically pointed to “bank-led and bank-syndicated credits, not private credit” as the actual source of recent troubles. Analysis reportedly shows that Tricolor’s difficulties involved more than $2 billion in asset-backed securities arranged by Barclays and JPMorgan, while First Brands’ challenges stemmed from loans syndicated by Jefferies and other institutions. According to reports, Schwarzman suggested these bankruptcies “are widely believed to involve the fraudulent pledging of the same collateral to multiple parties,” making them fundamentally different from typical private credit situations.

Isolated Incidents Amid Strong Credit Performance

Blackstone President Jon Gray emphasized that “this really isn’t a private credit story,” noting that market participants have concluded these were isolated incidents. Despite the firm’s stock price reportedly declining more than 5% to $152.50 during Thursday trading, analysts suggest investors remain optimistic about credit strategies. The report states that Blackstone’s non-real estate credit assets under management grew to $432.3 billion, with $36 billion in inflows during the quarter.

Credit Dominates Asset Management Strategy

When including real estate credit, sources indicate Blackstone now manages approximately $500 billion in credit assets, representing an 18% increase from the previous year. According to the analysis, credit constitutes the firm’s largest asset class, accounting for roughly 40% of its $1.24 trillion in total assets under management. The report highlights particularly strong retail investor interest, with $3.6 billion flowing into BCRED, Blackstone’s perpetual credit vehicle for wealthy individuals.

Market Conditions and Future Outlook

While acknowledging that a late-cycle credit environment may bring “some increases in defaults,” executives reportedly expressed confidence in their credit platforms’ resilience. Schwarzman cited the firm’s historical performance, noting that annual losses have averaged just 0.1% even during the global financial crisis. Analysis suggests the firm’s investment-grade focused private credit platform has experienced zero realized losses to date. Gray reportedly expects “strong flows in credit in November” despite declining yields, emphasizing that private credit continues to outperform public markets.

Performance Metrics and Investor Appeal

According to the quarterly report, Blackstone’s private credit strategies delivered 2.6% returns (1.8% net of fees), while liquid credit returned 1.6% (1.5% net of fees). Gray noted that BCRED maintains a “97% floating rate,” meaning loan yields adjust with Federal Reserve rates. Analysts suggest this structure provides protection in rising rate environments while still offering superior returns compared to public market alternatives, which reportedly continues to attract investor capital despite broader market concerns.