DoubleLine CEO Jeffrey Gundlach warns private credit funds will underperform as yields fail to offset rising default risks.
DoubleLine Capital CEO Jeffrey Gundlach said investors in private credit funds will likely lose money as high yields no longer compensate for increasing default risks. He cited deteriorating credit quality and tighter lending standards as key concerns in the sector.
Private credit has surged in popularity, with assets under management exceeding $1.5 trillion globally, driven by yield-seeking investors. However, Gundlach’s warning contrasts with recent optimism about the asset class’s resilience amid rising interest rates.
Markets showed limited immediate reaction to the comments, though private credit spreads have widened modestly in recent weeks.