JPMorgan clamping down on lending to private credit groups - report

(Sharecast News) - JPMorgan Chase has reportedly clamped down on its lending to private credit groups, with bankers looking to cut risk as concerns mount over the credit quality of companies in their stables.

According to the Financial Times, citing people familiar with the matter, the bank informed private credit lenders that it had marked down the value of certain loans in their portfolios, which serve as the collateral the funds use to borrow from the bank.

The move will limit how much money JPMorgan lends to private credit groups against those loans going forward.

The loans that have been devalued are to software companies, which are seen as particularly vulnerable to the onset of AI.

According to two people briefed on the closed-door meetings, Jamie Dimon, JPMorgan's chief executive, told investors at the bank's leveraged finance conference last week that it was being more prudent in lending against software assets.

Troy Rohrbaugh, co-chief executive of JPMorgan's commercial and investment business, told analysts at a February company update that the bank was becoming more conservative compared to its peers on the risks in private credit.

"As the world gets more volatile . . . this outcome should be expected," he said, adding: "I'm shocked that people are shocked."

One person briefed on the bank's decision told the FT the valuation haircuts did not trigger margin calls at funds but were done to pre-emptively reduce the amount of credit available to the funds. Private credit executives said they had not seen other banks take a similar view as JPMorgan.

"They have been more difficult the past three months," the head of one fund said of JPMorgan's willingness to provide back leverage. He added that JPMorgan rarely got "rattled and this is the first time we've had a little issue".

JPMorgan declined to comment to the FT.