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Shadow Lending

All articles tagged with #shadow lending

finance2 years ago•8 min saved

The Hidden Link Between Insurance Premiums and the U.S. Shadow Lending Market

Private equity firms, including Apollo Global Management, Carlyle, KKR, and Blackstone, have entered the insurance industry, acquiring stakes in insurers or books of business, and using insurance premiums to expand their lending businesses. These firms invest the premiums more aggressively in private markets, such as collateralized loan obligations (CLOs) and asset-backed securities, than in traditional securities like government and corporate bonds. Regulators and researchers are concerned about the opacity and risk-building in the system, as insurers backed by private equity firms increase their holdings of riskier assets. The private lending market has grown significantly, reaching $1.75 trillion in 2022, and the industry now manages roughly $8 trillion in assets.

via The New York Times|

#finance #insurance-industry #private-equity

real-estate2 years ago•4 min saved

The Perils of Debt Funds for Landlords

Debt funds, a form of unregulated lending, have become increasingly prominent in commercial real estate in recent years, offering short-term loans with higher interest rates than traditional banks. These loans provide quick access to cash for property stabilization, tenant improvements, and new construction, but they come with potential risks and less favorable terms. Debt funds have stepped in as traditional banks slow or halt commercial real estate lending, and they have become a source of concern for regulators due to their lack of oversight. As the interest rate environment changes, borrowers who took out debt fund loans in the past few years may face challenges with refinancing and resizing their loans, leading to potential foreclosures and the need for additional equity.

via Crain's Detroit Business|

#commercial-real-estate #debt-funds #real-estate