There is a rebalancing happening as default rates rise. The assumption that private credit was near zero risk was false. The issue is that long-term paper (avg 16.2 years) was sold with quarterly liquidity to retail investors, creating a mismatch.

Not all investors understood the risks of these semi-liquid structures.

Firms have the ability to provide transparency, but valuations are set at a lag and are at the discretion of the fund manager. The key question is the education process for retail investors about what they are buying.

Gates may go up and it could take time to redeem capital.

The market is pricing in the Fed on hold, which is good for risk assets. However, tariffs from last year will play through in H2, and the oil/energy shock impacts supply chains and profitability. The biggest fear is if inflation rises and the Fed has to raise rates again.

That will stop the party of capital in the markets.

There will be net demand for these IPOs because index funds, pension plans, and endowments have to hold them. However, because the floats will be low, volatility will be remarkable.