Another One Bites The Dust

There’s a big difference between $25,000,000 and $0,000,000.

Another one bites the dust in private credit.

Bloomberg reported today that BlackRock has abruptly wiped out the value of a loan inside its private credit arm, marking a roughly $25 million position tied to Infinite Commerce Holdings at zero. And you don’t need a Yale PhD in Economics to know there’s a big difference between $25,000,000 and $0,000,000.

Just three months earlier, the junior debt had been valued at 100 cents on the dollar. In other words, a loan that appeared fully performing at the end of the third quarter is now considered worthless.

The borrower itself sits in a fragile corner of the market. Infinite Commerce is one of the many pandemic-era Amazon aggregators that rolled up small online sellers of spa products, light bulbs, and whatever else was trending on Shopify in 2021. Like much of that vintage, the model depended on cheap leverage, heroic growth projections, and the assumption that the pandemic e-commerce surge would last forever. Instead it ran into higher interest rates, softer demand, and the inconvenient reality that rolling up marginal businesses doesn’t magically turn them into great ones.

But the story isn’t $25 million going “poof” into thin air, it’s how quick it happened.

Going from par to zero in a single quarter is the sort of thing that tends to happen only after months — sometimes years — of deterioration that everyone politely pretends not to see. I’ve noted that private credit valuations move on a different clock than the real world. Because these loans rarely trade, they’re priced using internal models instead of actual market bids, which means marks can sit comfortably near par long after the borrower’s fundamentals have started to crumble. Then eventually the accounting catches up and the mark drops all at once. It looks sudden, but really it’s just the spreadsheet finally admitting what the market already knew.

We’ve seen this movie a few times recently. Zips Car Wash was marked close to par by lenders only months before it filed for bankruptcy. Late last year, BlackRock TCP Capital wrote down the full value of loans to Renovo Home Partners, a struggling home improvement company. In each case the business deteriorated first and the markdown came later.

Meanwhile, outside the Potemkin world of bullshit model-based valuations, reality is less forgiving. Private credit portfolios are being quietly marked down, borrowers are cracking, and at the same time households are raiding their 401(k)s just to keep up with bills.

What If The Automatic Stock Buying Stops?

But in the strange accounting universe where illiquid loans stay at par until they very suddenly don’t, everything is apparently fine — right up until it isn’t.

The latest write-down also arrives at an awkward moment for the broader private credit ecosystem. As I noted earlier this week, redemption pressure has already started showing up in large credit vehicles. Blackstone’s flagship private credit fund recently faced the largest withdrawal requests in its history, with investors seeking to redeem nearly 8% of shares in a single quarter — well above the fund’s typical redemption cap.

Individually, none of these developments necessarily signal systemic stress. Loans go bad, niche business models fail, and investors periodically rebalance portfolios. But taken together they begin to illustrate a pattern that markets have largely avoided confronting: private credit’s perceived stability depends heavily on the absence of continuous price discovery.

Public credit markets reprice daily. Private credit markets don’t. Losses can therefore remain invisible for long stretches of time, only appearing when a borrower restructures, files for bankruptcy, or a manager is forced to update marks. That’s why transitions from “fully performing” to “worthless” can appear so abrupt.

What matters now is not the size of this specific loan but the direction of travel. If more borrowers begin to stumble — particularly in sectors that expanded rapidly during the era of cheap money — the gap between model valuations and economic reality will inevitably narrow. When that happens, the process of repricing illiquid credit can accelerate quickly, especially if investors simultaneously begin requesting liquidity from funds that were designed around long lockups and slow-moving assets.

For now, the Infinite Commerce write-down is just another small crack in the surface of a $1.8 trillion market. But markets rarely unravel through a single dramatic event. They tend to erode incrementally, one markdown at a time, until the narrative of stability no longer holds. Today’s zero mark is simply the latest reminder that the repricing phase in private credit is already underway.

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