65 points JumpCrisscross 2 hours ago 11 comments

shellwizard 1 hour ago | parent

chollida1 1 hour ago | parent

One interesting knock on from the hyperscaler growth we've seen is that the Mag7 have issued so much debt that they are crowding out other companies who would otherwise have no trouble issuing debt.

The private equity and private credit crowd is one of these groups that are currently running into this issue.

There is no way a growing company($15M to $500M in yearly sales is the sweet spot for these private credit companies) can compete with Google on debt terms so they have to raise their rates to compete suddenly, not because of all rates rising but strictly because we've just seen a huge debt issuance from some very solid credit companies.

We haven't seen a shock like this in 20+ years I've followed the credit market where a small group of companies issue so much high quality debt in such a short period of time, note there is also a lot of less high quality debt issued in this same time:)

So much has been issued that credit funds have run out of appetite to acquire Lowe middle market debt at their current spreads. This is just the way markets work so no one is crying in the casino but it is a big shock to the credit markets.

heck there was concern that the US government may have trouble issuing 5-10Y debt at rates they are used to because of the amount of GOOG, META,etc debt that is available at better terms.

Its a wrinkle to the markets that no one really predicted as a knock on effect of AI's growth.

This is all the back drop for BDC(Business Development Companies) and other private credit issuers who normally loan money for 5-7 year terms.

Those cheap 2021 loans to these small private companies are now coming due into this market with the additional head wind that the largest single sector that issued debt was venture backed software companies, who now face the head winds of the macro factors described above and the additional factor of AI commoditizing alot of hte software that these companies are building.

Private credit and equity are going to have a rough couple of years.

Things to watch out for are lack of IPO's and exist from venture/PE backed companies and a proliferation of continuation funds that kick the can down the road.

On the plus side, its a great time to be a credit trader, but not necessarily a credit issuer:)

vmbm 1 hour ago | parent

And it is bleeding over into equities as well. Between the SPCX and Anthropic IPO, and META approving an ATM offering, feels like we are seeing a really big strain on liquidity across the board.

orwin 57 minutes ago | parent

Yes. And bear in mind than default create inflation naturally. When it's productive companies that default, the effect is increased. If PE can't roll their debt, i fear it will increase the dollar inflation really fast, which will have second order effect.

Also since idiots predicted hyperinflation 5-4 years ago and other idiots believed them, we're still before the 'bust' of precious metal prices (We're at the point where people invest in opening new gold/silver mines), which means it will be harded to edge against inflation than it used to be.

toomuchtodo 21 minutes ago | parent

> "Predicted hyperinflation"

The Fed has been trying to hit its 2% inflation target (which is arguably unrealistic as the neutral rate but that's another topic) for half a decade and can't hit it. I suppose the question is: What do you consider hyperinflation objectively?

https://www.stlouisfed.org/on-the-economy/2025/oct/is-us-abo...

Due to structural demographics and other factors (exhausting institutional buyers of sovereign debt no longer required to buy and hold it at below market pricing, and sovereigns now having to go sell debt into a price sensitive debt market), we've gone from a capital surplus to a capital shortage, and this will likely continue long into the future due to demographics (working age population shrinks, wages get pushed up, and a whole lot of debt that needs to get refinanced at current and forward curve interest rates [real estate, private equity, sovereign debt, etc]).

https://www.apollo.com/wealth/insights-news/insights/daily-s...

If you can forecast the cost of money curve, you can forecast "who has been swimming naked when the tide goes out" based on their debt load and future cost of debt, and therefore when the economics turn against what the fundamentals can support.

https://www.ustreasuryyieldcurve.com/

https://buffett.cnbc.com/video/1994/04/25/buffett-you-dont-f...

mandevil 1 hour ago | parent

For a while (2018-2022) it was hot to buy up software companies that dominated a single niche and jack up prices. The bet was that since software is such a 0-1 business that they would have great moats and have strong pricing power. My father-in-law is blind and used to use JAWS until it got bought up by a private equity firm (Vispero) which tried to dominate the software accessibility market and jacked up the prices to annual subscriptions. He's a electrical engineer so he was comfortable switching to free software NVDA, but a lot of people paid up.

Now with LLM's that business model is in shambles and the finance side of it is less attractive with interest rates so high. I suspect that this is actually driving the software engineer hiring slow-down, because these companies were actually doing most of the employing of software engineers, much more than the big tech companies.

dam_jackalopes 29 minutes ago | parent

I'm not a SWE, (I'm a data engineer) but this jives with what I saw while looking for work. I'm not a particularly good DE, so I was out there for 18 months. There were still plenty of listings but not many of them were in "tech" companies in the traditional sense. Part of this was leaving a tech hub for what is very much not one, but the biggest issue that I found in landing work was that I was now competing for relatively boring $100k+ jobs with guys who were working $200k+ jobs in 2020 - 2023. The 3 - 6 "tech" orgs that used to employ these folks regionally just aren't really hiring that much.

hedgehog 6 minutes ago | parent

As I understand it the situation is much worse than that, the existing debt is floating rate so in some situations can put previously sustainable companies into the red. This of course also affects their ability to refinance so it can spiral from there unless they take drastic measures (which still might not be enough).

cs702 40 minutes ago | parent

As I understand it, there's also a 'write-down wall' looming over many companies and assets in private equity portfolios.

Those holdings are carried in the books at valuations that arguably could be justified in the past but are no longer realistic.

Private equity firms are basically sitting on them, unable to sell them or list them at current valuations.

toomuchtodo 14 minutes ago | parent

Indeed.

The End of Private Equity’s Leveraged Buyout Era Is Nigh - https://www.bloomberg.com/opinion/articles/2026-09-30/the-en... | https://archive.today/B1EfY - September 30th, 2026

Blackstone’s Private Equity Chief Joe Baratta Leaving Firm - https://www.bloomberg.com/news/articles/2026-09-25/blackston... | https://archive.today/ZH2so - September 25th, 2026

https://news.ycombinator.com/item?id=47049024 (citations)

FuriouslyAdrift 1 minute ago | parent

PE has a glut of 32,000 companies ($4T in equity) they can't sell and the average hold time is extended past 8 years.

https://www.notveryprivateequity.com/eight-year-hold/ https://www.pennmutualam.com/market-insights/blogs/chart-of-...