By Jonathan Weil
Private-credit firms, like private-equity managers, long used opacity to their advantage. Right now it is a liability.
Fear over the outlook for software companies swept through the markets this week. Anthropic unveiled new artificial-intelligence tools to automate tasks for lawyers such as contract reviews and legal briefs. Software stocks tanked, as did shares of media companies, stock exchanges and providers of research and data.
Alternative-asset managers such as Blue Owl Capital and Ares Management were hard hit, as were the likes of KKR and Blackstone. On the credit side, some of the loan books they manage are weighted heavily to software makers and other services providers paying rates befitting junk credits.
Outsiders have limited insight into borrowers' performance, and rarely enough visibility to challenge the valuations assigned by the managers. Last year a couple of blowups, such as First Brands, alerted investors that loans valued one day at or near par could go to zero overnight, with no early warning system built into the financial reporting.
So when fear suddenly gripped the markets over a gloomy narrative about the software industry's future, dumping shares of alternative-asset managers made sense. Investors instinctively figure it will be too late by the time problems get reported in the portfolios' numbers. With AI's ultimate impact so uncertain, fewer investors are in the mood to guess what their downside could be.
If the valuations were less opaque, and even occasionally less smooth, investors may have felt they could afford to be more patient. This week, they decided they could not.
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(END) Dow Jones Newswires
February 04, 2026 09:56 ET (14:56 GMT)
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