The new circular trade in private credit
Private capital groups have a new opportunity to buy significant risk transfers tied to credit funds
A growing chorus of private capital executives insist there’s nothing to worry about in private credit.
Fears stemming from a few high-profile defaults in the loan marketplace are overblown and overhyped by the media, according to luminaries such as Apollo’s Marc Rowan and Blackstone’s Stephen Schwarzman.
DD is excited to point out that they now have a new way to express their confidence in their own cooking: buy significant risk transfers tied to the very credit funds they are sanguine about, from banks seeking to trim their exposure.
Japan’s largest bank, Mitsubishi UFJ Financial Group, is in talks with investors to offload its exposure to about $2bn of loans it extended to listed private credit funds, people familiar with the matter told the FT.
Specifically, MUFG has pitched a $200mn risk-transfer product that would protect the bank against losses if private credit funds failed to repay their debt.
The product, called an SRT, is underpinned by about $2bn of credit lines for business development companies.
For the bank’s part, offloading the risk offers it capital relief to free up more capacity for lending and dividend payouts.
“Bankers are under pressure to tell their bosses that they got their private credit exposure down because investors will ask in upcoming earnings calls,” one person familiar with the matter told the FT.
Private capital already has investments in SRTs tied to private equity capital call lines and other corporate credit. In recent weeks banks have sounded out investors about a variant of an SRT to offload risks tied to data centre debt.
The sceptical view is that the arrangement will just create a circular risk, given that the most likely buyers are firms that have massive private credit operations. It also underscores the growing interconnections between the banking system and the giants of private capital.
Indeed, Blackstone, Apollo and Ares are among those that banks have pitched on private credit SRTs, according to people familiar with the matter.
If firms with private credit operations do load up on these products, any adverse loss could hit them in multiple ways.
Blackstone faced this criticism in 2024 as it loaded up on SRTs underpinned by short-term loans used by private equity funds. “They are providing protection on themselves,” one large SRT investor told the FT at the time.
It will also be interesting to see how MUFG decides to deploy the cash freed up by the arrangement. Perhaps to make further loans to private credit funds?
GS US Equity Views — "The rise and reach of retail trading" (13 May 2026)
- Retail activity has re-accelerated with the rally: GS desk estimates show retail trading volumes up 28% since mid-April, with the retail-favorites basket (GSXURFAV) up 29%. Removal of pattern-day-trader rules is a further tailwind.
- Size vs. footprint: retail holds ~$12tn in self-directed brokerage accounts (~10% of US corporate equity cap), but accounted for ~19% of trading volumes over the last 4 quarters — below the 24% 2021 peak, above 15% a decade ago; 17% as of Q1 2026. Institutions only see a sliver directly — brokers route 87%+ of order flow to wholesalers, who internalize ~84% of it.
- Leverage: FINRA margin debt hit $1.3tn, 52% of gross customer balances — a record, though GS attributes most of the decade's rise to institutions, not retail. Retail share of volume in leveraged S&P/Nasdaq ETFs runs ~2x the unleveraged equivalents.
- Tilts: highest retail share in Consumer Discretionary & Tech; skewed to small-caps, high-volatility, high-valuation, and high-short-interest names. Retail was 13% of volume in the top 5% most-shorted stocks in 2025, up from 9% in 2019.
- Behavior in drawdowns: retail volume rises in absolute terms during selloffs, but in the 2025 and March 2026 episodes it fell as a share — retail bought rebounds more than dips. Single-stock sharp declines reliably pull in retail.
- Market impact: controlling for fundamentals, a 1 s.d. increase in retail activity maps to ~0.16 s.d. higher forward EV/sales (~half a turn), plus higher residual volatility. Crucially — high-retail stocks underperform more after earnings misses (Exhibit 24: ~-2.8pp 1-day excess return for the top retail-share decile vs. ~-1.7pp for the lowest).
Conclusion
The actionable edge is the asymmetry around catalysts. High-retail names carry a valuation premium and a fragility discount: they overshoot on the way up but punish misses harder — argues for owning these into beats only with conviction, and for the short book / put structures being disproportionately effective on the miss side. Retail's documented chase behavior (buying rebounds, not dips) means retail flow is a poor contrarian bottom signal in 2025–26 but a decent momentum confirmer. Short-interest crowding plus rising retail share is the classic squeeze setup — size shorts in high-retail, high-SI names accordingly and respect borrow. Net: treat elevated retail share as a position-sizing and volatility input, not just a sentiment curiosity — it's a measurable factor in post-earnings drift and realized vol.
Here's the GSXURFAV top 25 by YTD retail share of volume:
| Ticker | Name | Sector | Mkt cap ($bn) | YTD ret | Retail % vol | '27 sales gth | NTM EV/Sales |
| AAL | American Airlines | Industrials | 8 | -17% | 27% | 4% | 0.6x |
| NU | Nu Holdings | Financials | 73 | -21% | 21% | 21% | 4.1x |
| SOFI | SoFi Technologies | Financials | 25 | -39% | 20% | 22% | 4.0x |
| TSLA | Tesla | Cons Disc | 1,473 | -4% | 18% | 15% | 13.9x |
| APLD | Applied Digital | Info Tech | 9 | +79% | 18% | 109% | 20.6x |
| SNDK | Sandisk | Info Tech | 135 | +512% | 17% | 41% | 5.9x |
| HIMS | Hims & Hers Health | Health Care | 7 | -23% | 17% | 20% | 2.0x |
| INTC | Intel | Info Tech | 330 | +227% | 16% | 11% | 10.6x |
| PLTR | Palantir | Info Tech | 349 | -23% | 16% | 44% | 38.6x |
| MU | Micron | Info Tech | 506 | +169% | 16% | 33% | 5.7x |
| AMD | Advanced Micro Devices | Info Tech | 448 | +109% | 16% | 52% | 12.5x |
| RKLB | Rocket Lab | Industrials | 52 | +69% | 15% | 39% | 67.8x |
| F | Ford Motor | Cons Disc | 51 | -6% | 15% | -1% | 0.9x |
| NVDA | NVIDIA | Info Tech | 4,910 | +18% | 15% | 34% | 13.3x |
| HOOD | Robinhood Markets | Financials | 82 | -31% | 15% | 23% | 15.6x |
| PFE | Pfizer | Health Care | 157 | +7% | 14% | -4% | 3.3x |
| ASTS | AST SpaceMobile | Comm Services | 24 | 0% | 13% | 344% | 57.2x |
| SMCI | Super Micro Computer | Info Tech | 17 | +12% | 13% | 22% | 0.6x |
| MSTR | Strategy Inc | Info Tech | 59 | +21% | 13% | 2% | 152.0x |
| COIN | Coinbase Global | Financials | 56 | -8% | 13% | 24% | 7.8x |
| AAOI | Applied Optoelectronics | Info Tech | 12 | +440% | 12% | 169% | 8.4x |
| APP | AppLovin | Info Tech | 166 | -27% | 12% | 30% | 18.4x |
| BE | Bloom Energy | Industrials | 62 | +223% | 12% | 70% | 19.6x |
| WDC | Western Digital | Info Tech | 127 | +184% | 11% | 31% | 11.1x |
| ORCL | Oracle | Info Tech | 511 | -4% | 11% | 41% | 7.7x |
Anduril raises $5B, doubles valuation to $61B
Another year, another massive influx of capital for Anduril: The funding round that was rumored to be in process in March has officially closed. Anduril has raised a $5 billion Series H round at a $61 billion valuation, led by returning investors Thrive Capital and Andreessen Horowitz, the company announced Wednesday.
This is more than double the valuation it landed just under a year ago, when it raised $2.5 billion at a $30.5 billion valuation led by Founders Fund. (Founder’s Fund invested a $1 billion check, the largest check it has ever written, it told TechCrunch at the time.)
This latest raise comes after the nine-year-old defense tech company doubled revenue in 2025 to $2.2 billion, CEO Brian Schimpf wrote in the blog post announcing the raise.
Interestingly, as much as Anduril is the clear-cut winner among VC investors, the Department of Defense is already giving signs that it won’t lock itself into any one rising-star startup.
Shield AI, another U.S. drone company, recently had its software selected by the Air Force to work with Anduril’s “Fury” autonomous fighter jet, rather than granting the whole hardware and software contract to either one of them.
Still, Anduril is hardly hurting by sharing. In the past few weeks, it has announced a number of contracts, expanding outside the U.S., too.
In May it announced it was part of a contract with others to develop a space-based “golden dome” defensive system — a missile defense shield designed to protect the continental U.S. — for America. Anduril also announced a contract win from the Dutch Ministry of Defence and a U.S. Army contract for battle manager software, using its Lattice platform to analyze data from joint missile defense systems.
"When we founded Anduril in 2017, defense was not a category that attracted significant venture investment. That has changed meaningfully over the last several years," Schimpf wrote in the post.
It has. To offer just a few recent examples: In March, Shield AI raised $1.5 billion in Series G funding at a $12.7 billion valuation. Last month, Hermeus, maker of hypersonic unmanned fighter jets, raised $350 million at a $1 billion+ valuation, led by Khosla Ventures. And European defense tech darling Helsing is reportedly close to raising a new $1.2 billion round at about an $18 billion valuation, led by Dragoneer and earlier Helsing investor Lightspeed.
Anduril has now raised more than $11 billion from investors altogether.
The new circular trade in private credit
Private capital groups have a new opportunity to buy significant risk transfers tied to credit funds
A growing chorus of private capital executives insist there’s nothing to worry about in private credit.
Fears stemming from a few high-profile defaults in the loan marketplace are overblown and overhyped by the media, according to luminaries such as Apollo’s Marc Rowan and Blackstone’s Stephen Schwarzman.
DD is excited to point out that they now have a new way to express their confidence in their own cooking: buy significant risk transfers tied to the very credit funds they are sanguine about, from banks seeking to trim their exposure.
Japan’s largest bank, Mitsubishi UFJ Financial Group, is in talks with investors to offload its exposure to about $2bn of loans it extended to listed private credit funds, people familiar with the matter told the FT.
Specifically, MUFG has pitched a $200mn risk-transfer product that would protect the bank against losses if private credit funds failed to repay their debt.
The product, called an SRT, is underpinned by about $2bn of credit lines for business development companies.
For the bank’s part, offloading the risk offers it capital relief to free up more capacity for lending and dividend payouts.
“Bankers are under pressure to tell their bosses that they got their private credit exposure down because investors will ask in upcoming earnings calls,” one person familiar with the matter told the FT.
Private capital already has investments in SRTs tied to private equity capital call lines and other corporate credit. In recent weeks banks have sounded out investors about a variant of an SRT to offload risks tied to data centre debt.
The sceptical view is that the arrangement will just create a circular risk, given that the most likely buyers are firms that have massive private credit operations. It also underscores the growing interconnections between the banking system and the giants of private capital.
Indeed, Blackstone, Apollo and Ares are among those that banks have pitched on private credit SRTs, according to people familiar with the matter.
If firms with private credit operations do load up on these products, any adverse loss could hit them in multiple ways.
Blackstone faced this criticism in 2024 as it loaded up on SRTs underpinned by short-term loans used by private equity funds. “They are providing protection on themselves,” one large SRT investor told the FT at the time.
It will also be interesting to see how MUFG decides to deploy the cash freed up by the arrangement. Perhaps to make further loans to private credit funds?
The Fast and the ‘Fraudulent’
How many Ferraris does the owner of a niche property lending firm need?
In the case of Paresh Raja, the flamboyant founder of collapsed mortgage firm Market Financial Solutions, the answer was allegedly six . . . along with three Aston Martins, two Mercedes and three Rolls-Royces.
The fleet of luxury cars is among the trophy assets that MFS’s administrators claim in a new lawsuit that Raja purchased after “plundering” his company “to fund a lavish lifestyle”.
MFS borrowed £2.6bn from lenders before its spectacular implosion, prompting heavy losses for banks such as Barclays and private credit firms including Apollo’s Atlas unit. MFS’s administrators allege that at least £1.3bn of this borrowed money has been misappropriated.
A spokesperson for Raja told the FT that he “strongly denies the allegations” and “has consistently maintained there was no fraud or dishonesty”.
Before its collapse, MFS was one of the UK’s largest providers of bridging loans — short-term mortgages taken out by borrowers who struggle to obtain traditional bank finance.
The FT took a closer look at this very British form of property lending, discovering that US private credit money has turbocharged the high-octane niche.
Take Duncan Kreeger. Having started out working at his father’s mortgage brokerage as a teenager, the 42-year-old has since co-founded two bridging lenders. He candidly states on his personal website that “around 50 per cent of the businesses he has been involved in have failed”.
US private credit firms have proved willing lenders to Kreeger’s firm, TAB, which has not been accused of any wrongdoing, but has previously racked up losses on non-performing loans.
In an interview with the FT, Kreeger clarified that his failed businesses primarily comprised ventures from his youth, such as trying to sell alloy wheels online and opening a poker club in North London.
“Lending money is the oldest business in history,” he said. “Bar one maybe.”