The Spillover

Private Credit's Black Box + Why It's Not 2008 (But Still Risky)

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This episode dives into how the opaque growth and structural risks in private credit, combined with global supply shocks and market stress spurred by the Iran war, are creating a uniquely fragile and unpredictable economic landscape.

 

Hosts:

 

Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR)

 

Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR)

 

We discuss:

  • The rapid rise of private credit, its lack of transparency, and why recent bankruptcies are raising red flags. 
  • How $10 billion in redemption requests were submitted to major private credit funds in the first quarter of 2026—including major funds Apollo, Ares, and Blackstone. 
  • Why this moment isn’t a repeat of 2008, but still presents real risks due to government debt levels and the lack of safety nets for private credit. 
  • As Rebecca Patterson, CFR senior fellow, puts it: “No one has any idea what’s going to happen—and that’s exactly the challenge right now.” 
  • Current structural risks in private credit, including liquidity mismatches, redemption limits (“gates”), and growing exposure to retail investors. 
  • Why financial markets are behaving unusually, with rising bond yields and weakening traditional safe-haven assets. 
  • How central banks are stuck between fighting inflation and supporting growth, creating a far more complex policy environment than past crises.

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    Mentioned on the Episode:

     

    Sebastian Mallaby, The Infinity Machine: Demis Hassabis, DeepMind, and the Quest for Superintelligence, Penguin Random House

     

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    The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

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    The SpilloverBy Council on Foreign Relations