According to a Bloomberg report, hedge funds are betting against private credit lenders due to trade wars, a shrinking economy and rising strain among borrowers. According to the report, short sellers have made approximately $1.7 billion on paper so thus far in 2025 betting against some of the largest direct lenders.
Bloomberg reports that while direct lenders have touted tariff-induced volatility as an opportunity to attain a larger share of the market, their share prices have fallen over the past few months. Additionally, the International Monetary Fund warned of concerns that deteriorating borrower credit quality has not been reflected in loan valuations.
Read the full Bloomberg report here.