Jamie Dimon says there could be ‘hell to pay’ as surging private credit market starts to show cracks

• “There could be hell to come” if private credit markets falter, Jamie Dimon said.

• He warned that there are bad players in the industry, and they are likely to be the source of any problems.

• “I don’t think it’s systemic, but I do expect there will be problems.”

JPMorgan Chase CEO Jamie Dimon said private credit could cause turmoil if the opaque sector of financial markets weakens.

“There might be hell to pay,” he said said at a conference on Wednesday. “I’ve seen a few of these deals that were rated by a rating agency and, I have to admit, it shocked me what they got. So it reminds me a bit of mortgages.”

The private lending market – a corner of the financial world dominated by non-bank lenders that make loans to private companies – has grown rapidly in recent years. Although returns on these assets have continued to exceed the S&P500 since the early 2000s, risks in the industry are not well known, the IMF noted in April.

According to Dimon, some players in the sector are “brilliant” and the sector is succeeding in meeting the financial needs of companies that may be overlooked by larger institutions.

“But not all the people who do it are good,” Dimon said. “And the problems in the financial markets are often caused by the ‘bad’, the people who make the mistakes.”

Problems could arise as retail investors become increasingly exposed to this space and face private credit assets that may be illiquid, improperly marked or not stress-tested, he said.

“Retail customers tend to go out and call their senators and congressmen,” Dimon said, later concluding: “

At the same time, JPMorgan itself is looking to move deeper into this space, with the bank looking to acquire a private lending company to expand its footprint in the sector. Bloomberg reported. According to the outlet, the lender has also set aside $10 billion for direct loans.

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