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> what will break the clock ?

So unlike money-market funds, these private-credit funds can gate withdrawals and extend and pretend by turning cash coupons into PIKs. So I don't actually see credit concerns directly driving liquidity issues for the banks that didn't hold the risk on their balance sheet glares Germanically.

Instead, I think the contagion risk is psychological. Which is an unsatisfying answer. But if there are massive losses on e.g. DBIP and DB USA halts withdrawals, then the 2% stock loss Morgan Stanley suffered when it capped withdrawals [1] could become a bigger issue.

[1] https://www.wsj.com/livecoverage/stock-market-today-dow-sp-5...

by boringg7 hours ago|

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I believe the gated feature can be waived though it causes a precarious situation. It ends up with same psychology of a bank run -- people (institutions) concerned because they can't access funds or they think that the queue to exit a failing fund is too long - filled each quarter (i.e. by the time they redeem NAV has collapsed).

by JumpCrisscross7 hours ago|

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> the gated feature can be waived

Or never invoked. It's a safety feature for the fund and, arguably, systemic stability.

by boringg7 hours ago|

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Totally - its supposed to prevent a collapse of confidence but at the same time can signal a collapse of confidence. Double edged sword.

by epsteingpt7 hours ago|

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You can't gate redemptions forever amigo.

People eventually want to spend their money.

by themgt7 hours ago|

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As Buffett said, "only when the tide goes out do you learn who has been swimming naked" - luckily, skimming the news, there's no obvious huge exogenous macroeconomic shocks on the horizon that could cause "the tide to go out" so to speak, so everything should be ok for now.

by Ekaros3 hours ago|

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Umm... Couldn't whole Iran debacle be such shock? If the effects are not contained?