Blackstone Credit Suffers Total Demand Collapse On $1.8 Trillion Crisis

Blackstone is facing a multi-billion dollar private credit collapse and they are desperately trying to claw their way out of it through essentially two different, incredibly sneaky plans that, unfortunately for them, they've been unable to hide. First of all, they're diving headfirst into the AI bubble right as it reaches its zenith and is also on the brink of collapse, and secondly, they're reducing the amount of private credit lending they do in their private credit fund to try and convince investors to get back in, whilst not recognizing the irony in their own private credit fund abandoning the sector as they claim it's never been stronger. All that to be covered today here on Stoic Finance with me, your host Max, and if you want to stay up to date on the financial news the legacy media won't show you, like and comment under this video so the algorithm shows you my future videos and of course, subscribe to the channel as well. Two private credit funds sold more investment-grade bonds Monday than they initially targeted following a lull of deals from so-called business development companies, private credit firms, to start the third quarter. Blackstone's private credit fund raised $750 million from its sale of five-year notes and Blue Owl Technologies priced $400 million of notes that increases the size of a June sale. The two funds' transactions follow a $350 million sale by Baring's private credit group back in August. Private credit funds managed by firms like Blue Owl have been a source of investor concern this year as valuations of software-related debt fell due to worries about AI-related disruptions. Some, including at Blue Owl, have had to limit redemption requests. Some doing a lot of heavy lifting there for Bloomberg, I believe the correct term is almost all. So, Blackstone, Blue Owl and Baring's, all of their business development companies, or basically just private credit funds, they've all just gone out and raised collectively billions of dollars through publicly available bond sales. On the surface, this sounds like good news, especially since the bond sales were oversubscribed and the yields are only about two to two and a half percent higher than treasury yields, which is exactly the story these firms want you to focus on. But there's something very sinister going on here. Why are private credit funds borrowing money from public markets when the entire purpose of private credit is to replace public markets? Well, here's what they're not saying. They're all facing insane liquidity crunches because their business model is giving out illiquid loans to companies that can't raise on public markets because they've been lying about the performance of these loans for years and their investors are finally working out the truth. They're running for the doors and these private credit funds are being forced to try and liquidate five percent of their holdings every single quarter to meet their redemption requests. But they can't sell any of these loans because no one else is stupid enough to buy them. And more and more of the loans aren't even being paid off anymore, meaning Blackstone, Blue Owl and the like, they're close to not even be able to reach the five percent redemptions that they have to honor every month legally. So they've turned to the public markets to raise capital, to pay out their investors and prevent their collapse. They are literally borrowing money today at interest rates of seven, sometimes even as close to eight percent just to pay out their investors the bare minimum that they're legally required to. This capital from these loans isn't going to be very productive capital. Almost all of it is not going to be lent out at higher yields to produce a profit. It's a Band-Aid, which is instantly going to be chucked out to investors to try and keep the lid on everything and prevent their collapses from becoming incredibly public and violent overnight. But it doesn't fix the underlying problem that these firms are unstable, unprofitable and hemorrhaging cash. It just kicks the can further down the road for a year or two and makes the inevitable crash even worse. Now, of course, Blackstone and the like, Blue Owl and everyone else, they know this, too. So what is their long term plan here? Well, the first long term plan was to put as much money as they can into AI, artificial intelligence, in the wild hope that they can make huge gains there so they can survive and prevent the collapse of their funds. The issue investors are starting to route in the AI debt markets right now as well. I've been talking about critical minerals on this channel for a while now, and I've been especially focused on tungsten and its importance to national defense. And it's become even more urgent because the truth is there's a massive gap in the China controls about 80% of the world's supply. So Washington's policy directive is clear. American jets, tanks, ships and munitions all rely on tungsten, yet the US hasn't commercially mined tungsten in nearly a decade and now billions are being allocated to change that. And tungsten prices have exploded by roughly 310% this year alone. On the 20th of July, Trump signed an executive order to secure America's defense supply chains and push defense contractors towards domestic and allied sources of materials. On July 30th, the US authorized export restrictions on recoverable critical minerals, declaring that America's dependence on foreign sources poses a national security risk. And then on August the 17th, Trump announced billions of dollars in new mining deals and investments to supercharge American mineral production. That's a lot of dollars and a lot of demand. And this is where Goldhaven resources come into play. Trading in the US under GHVNF and in Canada under GOH, Goldhaven is currently drilling its flagship Magno project, where historical estimates point to over 600,000 tons of tungsten. This month, Goldhaven closed a $3 million financing specifically to advance its exploration and drilling program. Goldhaven is valued at roughly $20 million, but it's sitting in a billion-dollar mining In fact, some of its neighbors are spending multiples of Goldhaven's entire market cap on drilling alone in 2026. So if billion-dollar companies and governments are racing to secure the next generation of critical mineral supply, you have to ask yourself, could this be one of the smaller companies sitting in the right place at the right time? Now, if you want to learn more about this critical mineral story and the team, check out the link down below in the description. And of course, a special thank you to Goldhaven Resources for making today's video possible. Some of the world's biggest investors are pushing money managers to fork over more information on their AI-related holdings, as investment firms including Apollo and once again Blackstone plow billions of dollars into AI. Investors are increasingly asking buyout firms and other asset managers for more detailed reports on how the technology has made its way into a variety of funds, from infrastructure to credit to real estate and private equity, according to interviews with more than a dozen executives from the money managers, as well as pension funds, insurers, and sovereign wealth funds. We are concerned that so much exposure is tied to a single thread, that being AI, be that through data centers, software, or through our venture portfolio. We're trying to be mindful about our overall exposure to AI. Alternative money managers have become major financiers of the infrastructure necessary to power an AI build-out that's spawning fears of a bust that would eclipse the dot-com crush. That's giving some pause to the pensions, endowments, foundations, and other large institutional investors that are handing them billions of dollars. So these same firms are now diving headfirst into lending towards AI-adjacent companies as they think the cause of the private credit collapse is software companies being disrupted by AI, completely ignoring the fact that all, and I mean literally every single one, of the most high-profile private credit collapses have been in traditional markets like iron ore trading, or real estate, or selling cars. And now investors have caught on to this, and the fact that this doesn't make any sense, and they're demanding more information for these AI loans and are applying even more scrutiny. The ultimate funders of private credit as well, of this boom, pension funds, sovereign firms, endowments, and the like, basically any large institutional investor who is gambling with someone else's money and not their own, well, they're even now saying, hang on, there's too much AI exposure here as well, and we see a bubble, we're not going to invest with you anymore, meaning the strategy these firms have devised to counteract the private credit collapse is now causing their only remaining investors to turn around and say no as well. So it's no surprise that these redemptions are still sky high. Blackstone once again moved to limit redemptions from its flagship private credit fund for a second consecutive quarter, providing an early glimpse at the lasting pressures of the $1.8 trillion market. The $77 billion Blackstone private credit fund told shareholders that it would allow investors to pool only half of the 10% they requested according to their filing. It was an identical result to the prior period for BCRED, the largest private credit fund of its kind, the largest in the entire world, that is. But don't worry, because Blackstone have just announced their brand new genius plan to try and hold off the private credit collapse for just a little while longer. Yes, they're going to move into the fastest growing, the most bullish, the safest and the least corrupt market in the entire world. Yes, you guessed correctly. They're expanding into India, where fraud is practically a way of life. Blackstone is among global investment firms in the fray to buy a stake in mid-sized Indian shadow lender IIFL Finance, just as Fairfax Financial Holdings looks to exit from the company. Blackstone is in talks with Fairfax and other shareholders to acquire the stake in IIFL Finance. The private equity firm's potential involvement comes at a time when India's financial services industry has become a target for acquisitions because last year, the U.S. alternative investment manager, that being Blackstone, invested more than $700 million for a 9.9% stake in a federal bank. So that's their solution. Private credit in America and Europe, it's falling apart. So they're going to move to India instead and build a great big, what, private credit fund there. This despite some of the biggest American collapses of private credit, right, coming from companies which were run or founded by Indians who have now been accused of huge multi-billion dollar frauds. First Brands Group, it's the single most important private credit collapse in the entire world for this story. It was massive a couple of years ago when it happened, and it's still unrolling today. Patrick James was the founder and the CEO of First Brands Group, and he may sound like that's an Anglo-Saxon name, like he's British by descent or American today, but he was born in India and I believe remains a citizen of India still to this day. And Patrick James is essentially just a westernized name he's adopted. Fraud and scams and corruption makes up about 4% of the entire Indian economy. That's basically equivalent to how much America spends on its military. And Blackstone think the solution to their issues, the solution to seeing all of these great big frauds blow up and explode in the private credit market in America and Europe, many of which have been committed by Indians in America or Europe, the solution is to dive headfirst into the full Indian market. Now, if there's a specific topic you'd like me to cover tomorrow, then leave a comment down below in the description. 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