JPMorgan Chase & Co (NYSE:JPM, XETRA:CMC) has marked down the value of certain loans held by private-credit groups, according to a person familiar with the matter, as concerns grow about credit quality in the roughly $2 trillion private-credit market.
The Financial Times first reported the move on Wednesday, saying the markdowns relate to loans made to software companies.
Loan remarkings are relatively uncommon but are not unprecedented at the bank. The person added that adjusting valuations when market conditions change is “important to do when markets warrant it rather than waiting for a crisis to come along.”
JPMorgan declined to comment.
Private credit refers to loans issued by non-bank lenders, typically to borrowers that may face greater difficulty obtaining financing from traditional banks or to companies pursuing large leveraged buyouts. The market has expanded rapidly in recent years as investors sought higher yields and borrowers looked for faster access to capital.
However, the sector has recently come under increased scrutiny as some investors question the credit quality of certain borrowers. Loans to software companies in particular have drawn attention, with worries that parts of the industry could face disruption from advances in artificial intelligence.
Those concerns have contributed to investor withdrawals from some private-credit funds this year, amid fears that weaker borrowers could face rising default risks.
Shares of JP Morgan were down 0.3% at about $288 on Wednesday morning, down almost 11% so far this year.