What Is Private Credit? The Market Weiss Calls Toxic

“What is private credit?” is suddenly one of the most searched questions in finance, and a big reason is Dr. Martin Weiss. His “America’s Next Subprime Crisis” presentation has introduced millions of viewers to a corner of the financial system that, as the pitch itself puts it, “the average American has never even heard of.” Weiss sizes the market at $3 trillion and calls it “not subprime mortgages, but subprime private credit.”

Before you can judge that claim, you need to understand what private credit is. Here is the plain-English version.

The Simple Definition

Private credit is lending that happens outside banks and outside the public bond market. When a mid-sized company needs a loan, it has three traditional options: borrow from a bank, issue bonds that trade on public markets, or sell stock. Private credit is a fourth option that has grown enormous over the past two decades.

Here is how it works. An investment firm, think Blackstone, BlackRock’s HPS, Blue Owl, Apollo, Ares, or KKR, raises a pool of money from investors. Pension funds, endowments, and insurers put in billions. Then the firm lends that money directly to companies, negotiating the interest rate, the collateral, and the repayment terms privately. The loans do not trade on any exchange. Investors cannot sell them the way they sell a stock or a bond. They hold them until maturity.

Borrowers choose this route because it is fast and flexible. A private lender can fund a complicated acquisition loan in weeks. Investors choose it because the yields, often floating-rate, have recently beaten what public bonds pay.

Why It Grew So Large

Three forces pushed private credit from a niche strategy into the trillions. First, after 2008, bank regulation got stricter, and banks pulled back from lending to mid-sized and riskier companies. Private funds stepped into that gap. Second, years of low interest rates pushed investors hunting for yield into anything that paid more than government bonds. Third, the biggest managers built permanent fundraising machines, including products aimed at ordinary investors, not just institutions.

Estimates of the market’s size generally run from roughly $1.5 trillion to $3 trillion depending on what gets counted. Weiss’s $3 trillion figure is the top of that mainstream range, not a fantasy number, but worth knowing it is the most dramatic end of honest estimates.

Why Weiss Calls It the Next Subprime

The pitch’s argument has two layers. The first is a 2008 parallel: subprime mortgages were loans made to borrowers who could not really afford them, packaged and graded in ways that hid the risk, and spread through the system until the losses surfaced all at once. Weiss argues the same dynamics now exist in private credit: aggressive lending to stretched borrowers, valuations that are marked by the lenders themselves rather than by markets, and exposure spread through annuities, pensions, and funds that ordinary savers hold indirectly. For more on that, see our “Private Credit AUM: How Big the Market Really Is” piece.

The second layer is the ratings problem. Co-presenter Nilus Mattive, who worked inside one of the big three rating agencies during the housing crisis, describes the issuer-pays model in his own words: “Before a company’s rating was downgraded, it got advanced notice from the rating agency and had the opportunity to appeal the downgrade.” Weiss’s summary is sharper: “an open and shut case of payola for high grades.” The structural conflict is real; the agencies are paid by the companies they grade.

What Checks Out

The presentation names four real events, all documented by the financial press. First Brands Group filed Chapter 11 in September 2025 with over $11 billion in liabilities. Tricolor Holdings collapsed with double-pledged collateral, and the SEC has charged its former executives with fraud. BlackRock capped withdrawals from its $26 billion HPS Corporate Lending Fund at 5% per quarter after requests ran near double the norm. Blackstone’s BCRED has held its 5% repurchase cap amid multi-billion-dollar redemption backlogs.

What is forecast rather than fact: the claim that these events chain into a crisis “larger than” 2008. Weiss hedges this himself (“I have to believe”), which is more careful than most crisis pitches manage.

The Boring Summary Worth Memorizing

Strip the drama and the market is easy to state. Private credit is direct lending, done by funds, to companies, with money from pensions, insurers, and retail investors. It grew because regulation pulled banks back and low rates pushed investors out the risk curve. Its yields are real and its risks are real, and its structure (senior secured loans, held to maturity, marked by the holder) is both the defense against a 2008 repeat and the reason skeptics worry about delayed loss recognition. Whatever the crisis debate concludes, that neutral description will still be true, and knowing it puts you ahead of most headline readers. For the specifics, our “Private Credit Market Crisis 2026: The Evidence So Far” article is worth a read.

What It Means for You

Most people encounter private credit without knowing it, through annuity products, pension funds, or diversified funds that allocate to the strategy. The practical takeaway from the whole debate is worth learning regardless of whose forecast you trust. If you want the full context of how these crisis warnings echo across publishers, see our coverage of subprime AI debt in the AI bubble warnings and our guide to how annuities work and what they really cost.

The Weiss presentation leads to a $49 trial year of the Safe Money Report with five protection reports and a 12-month refund window; you can watch it here. If the phrase “private credit” keeps spreading the way “subprime” did in 2007, you will at least know what everyone is talking about.

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