Short Sellers Bet Against Private Credit Lenders: Credit Weekly

Hedge funds are betting that trade wars, a shrinking economy and rising strain among borrowers will begin to hit private credit in the US. So far, the gamble’s paying off.

Short sellers have made about $1.7 billion on paper so far this year from wagers against seven of the biggest direct lenders, including Apollo Global Management Inc., Ares Management Corp. and Blue Owl Capital Inc., according to data compiled by S3 Partners LLC.

While direct lenders have touted tariff-induced volatility as a chance for them to grab a larger slice of the debt market, their share ...