A recent comment from a Goldman Sachs executive has pulled back the curtain on how some major investors are thinking about market risks.
The executive mentioned that some clients are actually “glad” about the U.S.-Iran war because it serves as a distraction from a much more uncomfortable topic: the growing risks in private credit, especially loans made to software companies. Before the war escalated, asset managers like Blackstone and KKR saw their stocks fall sharply—some over 30%—due to fears that AI advancements could disrupt their software company borrowers. This created a tense atmosphere where everyone was scrutinizing the value and stability of these private assets.
So, how did we get to a point where a war could be seen as a welcome distraction? First, the most recent and intense pressure came in February 2026 when a major firm, Blue Owl, suddenly restricted investors from withdrawing money from one of its private credit funds. This sent a shockwave through the market, crystallizing fears about liquidity. Right around the same time, concerns about AI disrupting software companies intensified, leading to a selloff. Then, the war with Iran began, immediately shifting the market's focus to oil prices and geopolitical chaos, providing the perfect narrative shift.
Looking back a bit further, the stage was set months earlier. In late 2025, the bankruptcies of two companies, Tricolor and First Brands, amid allegations of fraud, put the entire non-bank lending sector on high alert. This even prompted JPMorgan CEO Jamie Dimon to famously warn that when you see one “cockroach,” there are likely more hiding. This sequence of events created a backdrop of anxiety around private credit long before the AI-related fears took center stage.
In essence, the Goldman executive's comment reveals a powerful market dynamic. The war narrative hasn't solved the underlying problems in the private credit market; it has simply pushed them into the background for now. Once the geopolitical tensions ease, the market's attention is very likely to snap back to the health of software company loans and the stability of the funds that hold them.
- Private Credit: Loans made directly to companies by investment funds, rather than by banks. It's a large and less regulated part of the financial system.
- Short Selling: A strategy where an investor borrows an asset and sells it, hoping to buy it back later at a lower price to make a profit. It's a bet that the asset's value will fall.
- Liquidity: The ease with which an asset can be converted into cash without affecting its market price. If a fund 'gates' or 'restricts' withdrawals, it means it has a liquidity problem.