Razor-thin corporate bond spreads are accelerating the migration into private debt, Michael Zawadzki, chief investment officer of Blackstone’s credit and ins. group, told Bloomberg (listen, runtime: 44:01) on a podcast. With high-grade spreads over Treasuries also dipping to their narrowest since the late 1990s, investors are shifting to private markets that can still deliver 150-200 bps more than traded debt.

Private markets have been front and center in recent months. Wealthy individuals poured USD 48 bn into US private credit funds in 1H 2025 — on track to beat last year’s total — as institutions pulled back. BlackRock also flagged infrastructure and private credit among the few areas still offering attractive returns as traditional anchors weaken in its latest outlook.

Blackstone’s take: “We see excess spread in private credit. That’s a really attractive thing for our clients around the world,” Zawadzki said. He expects sovereign wealth funds, pensions, and Asia-based insurers — where allocations remain around 5% — to drive flesh inflows.

The private credit market could swell to USD 30 tn, up from about USD 2 tn today, Blackstone predicts, with much of the growth in asset-based finance and private investment-grade lending. Data center buildouts for AI are also a key driver, with JPMorgan estimating some USD 150 bn of permanent financing will be required for US facilities in 2026-27. A revival in M&A is also seen as a near-term catalyst for new lending.

Not everyone is convinced. DoubleLine’s Jeffrey Gundlach has warned of “overinvestment,” arguing private credit has thrived in a strong economy and will be tested in a downturn. Zawadzki countered that defaults across Blackstone’s 2k non-investment grade borrowers remain below 50 basis points, pointing to solid fundamentals.

MARKETS THIS MORNING-

Asian markets are mostly in the green, tracking Wall Street gains on news of Nvidia’s USD 100 bn investment in OpenAI. The only outlier is Hong Kong’s Hang Seng, which is down 0.3%. Japan’s markets are closed for a holiday. Over on Wall Street, futures slid marginally after the three indices closed at all-time highs yesterday.

ADX

10,137

+0.1% (YTD: +7.6%)

DFM

6,027

+0.1% (YTD: +16.8%)

Nasdaq Dubai UAE20

4,899

+0.2% (YTD: +17.6%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

4.2% o/n

3.7% 1 yr

TASI

10,877

+0.6% (YTD: -9.6%)

EGX30

35,211

-0.1% (YTD: +18.4%)

S&P 500

6,694

+0.4% (YTD: +13.8%)

FTSE 100

9,227

+0.1% (YTD: +12.9%)

Euro Stoxx 50

5,442

-0.3% (YTD: +11.2%)

Brent crude

USD 66.57

-0.2%

Natural gas (Nymex)

USD 2.80

-0.1%

Gold

USD 3,782

+0.2%

BTC

USD 112,708

-2.2% (YTD: +20.4%)

Chimera JP Morgan UAE Bond UCITS ETF

AED 3.64

+0.6% (YTD: +4.5%)

S&P MENA Bond & Sukuk

150.45

-0.1% (YTD: +7.5%)

VIX (Volatility Index)

16.10

+4.2% (YTD: -7.2%)

THE CLOSING BELL-

The ADX rose 0.1% yesterday on turnover of AED 1.0 bn. The index is up 7.6% YTD.

In the green: National Bank of Fujairah (+14.3%), GFH Financial Group (+5.5%) and Gulf Medical Projects Company (+4.4%).

In the red: Rapco Investments (-8.3%), Hayah Ins. Company (-5.6%) and Al Khaleej Investment (-5.5%).

Over on the DFM, the index rose 0.1% on turnover of AED 463.7 mn. Meanwhile, Nasdaq Dubai was up 0.2%.

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