“When you see one cockroach, there are probably more.” Six words from JPMorgan CEO Jamie Dimon last October pulled $500 billion out of the alternative asset complex.
Since the start of the year, shares of major asset managers including Blackstone Inc. (NYSE:BX), KKR & Co. Inc. (NYSE:KKR), Ares Management Corp. (NYSE:ARES) and Blue Owl Capital Inc. (NYSE:OWL) have fallen between 25% and 46%.
Shares of business development companies, or BDCs, now trade at their deepest discounts to net asset value in more than five years.
Wall Street sees cracks forming in the private credit market. But Goldman Sachs just pushed back on the private credit selloff.
The Cockroaches Dimon Saw
Two names lit the fuse. Tricolor Holdings, a Dallas subprime auto lender, filed for bankruptcy in September 2025 amid allegations of pervasive fraud.
Weeks later, First Brands, a privately owned auto-parts supplier, filed Chapter 11 with as much as $2.3 billion in undisclosed off-balance-sheet financing, a chunk of which sat inside private credit funds.
Those events set the stage for Dimon's now-famous “cockroaches” remark during JPMorgan's third-quarter earnings call.
The comment landed because markets have seen this pattern before. Early failures often look contained until they are not.
Investors remember 2007, when Bear Stearns hedge funds collapsed ahead of the broader subprime crisis. The concern now is whether private credit, after more than a decade of expansion, faces a similar turning point.
Goldman Just Counted Them
On Monday, Goldman Sachs published an institutional rebuttal that doesn’t dispute the cockroaches Dimon saw.
It disputes the population count.
Goldman says defaults and overdue loans remain relatively low. The firm also notes some borrowers still show double-digit revenue and EBITDA growth. EBITDA means earnings before interest, taxes, depreciation and amortization. Investors use it to judge a company’s operating cash flow.
Data supports that stance. The Cliffwater Direct Lending Index — over 20,000 middle-market loans representing $550 billion in assets — shows realized losses at 65 basis points as of year-end 2025, per chief credit strategist Amanda Lynam. The long-term average is 100 basis points. The yield on the index is 9.9%.
In simple terms, income is more than offsetting potential losses.
Stress indicators also remain contained. Payment-in-kind income holds at 7%-8% of BDC total income, well below pandemic peaks. Non-accrual rates sit just under 1% of fair value, below historical norms.
Even early warning signals show little deterioration. The share of loans trading below $80, often a precursor to defaults, has barely moved.
Vivek Bantwal, global co-head of private credit at Goldman Sachs Asset Management, said, "Private credit is certainly getting a lot of media attention right now, not all of it necessarily nuanced or accurate."
Goldman's conclusion is straightforward. If a broader credit breakdown were underway, these metrics would already reflect it.
They do not.
What Needs To Break To Validate Dimon
Goldman's bullish call depends on one key variable: macro stability.
The firm expects U.S. real GDP growth of 2.6% in 2026. It also sees the Federal Reserve cutting rates two or three times before stabilizing in a 3%-3.25% range. Inflation is projected to fall to 2.3% by year-end.
That backdrop supports borrowers' ability to service debt.
If the economy holds, the private credit selloff may prove a buy opportunity.
But the margin for error is thin.
A sustained oil shock tied to geopolitical tensions, faster-than-expected disruption from artificial intelligence in software, or an earlier-than-expected recession could shift the equation quickly.
If growth slows materially, defaults would rise and valuation concerns would intensify.
That is the scenario where Dimon's metaphor gains traction and cockroaches may multiply.
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