The private credit market in the United States has been hit by another bombshell! BlackRock, Inc. (BLK.US) has written off another loan, valuing it at zero.

BlackRock, Inc. (BLK.US) has reduced the valuation of a private loan from 100% face value to zero, while just three months ago the loan was still being valued at face value. This marks the second recent case of a sudden "write-off" by its private credit division. According to the fourth quarter filing released last week by BlackRock, Inc.'s TCP Capital Corp., a loan of approximately $25 million provided to Infinite Commerce Holdings is now worth nothing - Infinite Commerce is a so-called "Amazon.com, Inc. aggregator," acquiring online sellers of various products from spa products to light bulbs. The company still valued this subordinated debt at 100% face value in the third quarter of last year. This write-down occurred only months after Infinite Commerce merged with another Amazon.com, Inc. aggregator and also a debtor of BlackRock, Inc., Razor Group. The merger resulted in a new debt structure, with the valuation at that time still close to face value. Prior to this, BlackRock, Inc. had struggled with the valuation of its loans to Razor. Like other private credit lending institutions, BlackRock, Inc. is facing a sharp reversal in the Amazon.com, Inc. aggregator industry. The industry boomed during the COVID-19 pandemic as online shopping surged, but has recently attracted attention due to frequent debt restructurings. Another lender to Infinite Commerce, Victory Park Capital, has also completely written off its investment in the company in its filings up to December 31st, attributing poor performance to weak demand and increased inventory costs due to tariffs. Although this is a small-scale loan in a troubled sector, the sudden devaluation highlights a critical issue in private credit criticism - the valuation of illiquid loans often lags behind the deteriorating operational conditions of the underlying businesses. In the months leading up to Zips Car Wash's bankruptcy filing, its private credit backers still valued its debt close to face value. It is worth noting that BlackRock, Inc. had already written down to zero the private debt it provided to home improvement company Renovo Home Partners in November last year. Renovo, a company formed by private equity firm Audax Group in 2022 through the integration of multiple regional kitchen and bath remodeling businesses, filed for bankruptcy abruptly in early November and announced plans to close operations. This bankruptcy directly led to a sharp decrease in the valuation of BlackRock, Inc.'s private debt to Renovo. TCP Capital Corp.'s CEO, Philip Tseng, emphasized that for Renovo's outcome, "we believe it is a reflection of issuer-specific issues rather than an indication of overall weakening industry." According to the fourth quarter filing, BlackRock, Inc.'s TCP Capital Corp. also partially wrote down its position in SellerX. TCP Capital Corp. stated in the filing that 91% of its valuation reductions in its portfolio were from transactions underwritten in 2021 or earlier, which faced challenges due to "continued high rates." These moves have heightened concerns in the market about defaults and underwriting standards in the $1.8 trillion private credit market. The industry's massive bets on software companies threatened by AI have led to unprecedented redemption requests from anxious investors. Reportedly, global private equity giant Blackstone Inc.'s flagship private credit fund, BCRED, experienced its most severe capital outflows since inception in the first quarter of 2026. According to the latest data disclosed, the fund experienced net outflows of $1.7 billion in the last quarter, a figure that not only broke historical records but also directly triggered market panic. This turmoil is not an isolated event, but a chain reaction of industry credit risk contagion. Earlier, another leading private credit institution, Blue Owl Capital, announced the suspension of redemptions for some of its funds, quickly shattering the market's illusion of "high returns, low volatility" for such assets. Over the past decade, the global private credit industry has rapidly expanded to a $2 trillion scale, but is currently facing multiple challenges: overvalued valuation and lack of transparency leading to market skepticism; unconventional operations like "payment in kind" by institutions such as Blue Owl exacerbating trust crises; and bankruptcy events of US auto parts suppliers and subprime auto loan entities last year exposing some participants to significant risk exposures. These shocks have not yet subsided, with the sudden collapse of UK mortgage lender Market Financial Solutions Ltd last Friday causing market tremors. Wall Street lenders are generally concerned that this may just be the tip of the iceberg - as the industry slang "cockroach theory" suggests, when one institution defaults, it often means more hidden risks are lurking. Nevertheless, top private credit lending institutions continue to report strong relative returns. One point highlighting the debate on market outlook is Apollo Global Management Inc. CEO Mark Rowan's warning that the private credit industry is about to undergo a shake-up. On the same day, Ares Management CEO Michael Arougheti stated that UBS Group AG analysts' prediction last week that private credit default rates could reach 15% was "completely wrong."