Private Credit Funds Face More Pressure as Banks Swap Collateral

For years, Wall Street banks eagerly helped private credit funds amplify their investing firepower with hundreds of billions of dollars in loans, helping them notch ever-higher returns.

Now, those same banks are tightening their arrangements, adding to the pressure on managers already reeling from an exodus of investors.

Some big banks are raising interest rates for the leverage they provide, and they’re also marking down specific loans posted as collateral. Behind the scenes, that’s prompting private credit fund managers to swap out holdings from the pools as banks including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Barclays ...