Private-Credit Hysteria? Why Apollo Says the Risks Are Overblown — And What Options Traders Should Watch

Private-Credit Boom: “Hysteria,” Says Apollo — But That Might Be a Hard Sell

In a recent op-ed, Apollo Global Management CEO Marc Rowan argued that the swelling private-credit market is being unfairly smeared by critics. He called the notion that private-credit constitutes a systemic threat “hysteria” and pushed back on warnings from legacy-bank and regulatory voices.

Rowan claims that the vast majority of private credit — roughly 95% — is investment grade, with only a small fraction tied up in leveraged loans or sub-investment grade debt.

He argues these assets are often held by long-term investors (like insurers or pension funds), not hedge funds seeking to flip debt, implying that the structure is more stable than critics claim.

From Apollo’s view: private credit isn’t a ticking time bomb. It’s a mature — if misunderstood — corner of finance, filling the post-2008 “banking gap,” with daily-priced funds and active trading, not illiquid back-room loans.

But Many Still See the Other Side — And Some of the Warnings Are Getting Louder

Despite Apollo’s confidence, skeptics argue the rapid expansion of private credit, combined with rising interest rates and corporate leverage, could become a serious vulnerability.

• Recent bankruptcies and loan defaults among midsize and capital-heavy firms have renewed scrutiny on “shadow lending” that isn’t subject to the same transparency or capital controls as traditional bank credit.
• A broader analysis from academics and regulators earlier in 2025 warned that private-credit funds, often intertwined with insurers and banks, could amplify risks by acting as “loci of contagion” during downturns.
• At the same time, regulatory bodies and central banks are starting to pay attention: some jurisdictions are already launching stress-tests aimed at private equity and credit markets — a sign that oversight might increase.

So even if Apollo says “no problem,” many on the Street are hedging — and that’s when volatility tends to come out of the shadows.

What This Could Mean for Markets — And Options Flow

If private-credit stress starts to surface, it could ripple beyond niche debt funds and hit the broader equity and credit markets.

• Alternative-asset managers like Apollo Global Management (APO), Ares Management (ARES), or Blue Owl Capital (OWL) — firms deeply exposed to private credit — could see share-price pressure if confidence erodes.
• Credit-funded corporates (especially highly-levered midsize firms) might face tougher refinancing conditions or markdowns, which could translate into equity stress and bond-market weakness.
• In a downside scenario, expect increased implied volatility (IV) across financials, specialty lenders, and credit-linked equity names. Options traders might flock to long puts or long-dated hedges (LEAPS) on risk-sensitive names.

At the same time, if this “hysteria” proves overblown, there could be powerful mean-reversion. Names like APO or ARES — if they survive the shake-out — might see outsized upside as depressed valuations rebound and investors chase yield in a low-rate environment.

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What Traders Should Watch — Key Signals & Catalysts

• Watch upcoming corporate defaults or distressed debt filings — especially among mid-cap, leveraged firms that tapped private credit. A cascade there could rattle confidence in the entire asset class.
• Monitor quarterly earnings and balance-sheet disclosures from alternative asset managers (APO, ARES, OWL) for signs of rising loan loss reserves, redemptions, or shifts in capital allocation.
• Pay attention to regulatory headlines — stress-test results, new disclosure requirements, or policy drives targeting non-bank lending could trigger major moves.
• Lastly: volatility spikes. Keep an eye on IV in financials and credit-linked equities — those could be the early warning signs that the “shadow banking” risk is emerging in real time.

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