The Impact of Two Consumer Classes and the Fed Funds Rate Outlook 

A Tale of Two Consumers

Novel Capital is a fintech-based alternative lending business based in Overland Park, Kansas founded in 2018.  Novel Capital provides non-dilutive financing for growing B2B SaaS and technology businesses seeking $100k to $5 million in financing.

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SWIFT said it is uniquely positioned to interlink the fragmented digital asset landscape with its forthcoming digital currency trials in 2025. Banks in North America, Europe and Asia are preparing to participate in trials involving digital assets by the Society for Worldwide Interbank Financial Telecommunication (SWIFT).  SWIFT announced on Oct. 3 that it will begin digital asset trials on its network in 2025. The trials will involve experiments with transactions that include multiple digital currencies and assets.

Banks to join SWIFT digital asset trials in 2025

ARK Invest founder and CEO Cathie Wood expects that a “changing of the guard” at the United States Securities and Exchange Commission may turbocharge the economy and bring about an influx of innovation and investment in emerging technologies.  “Deregulation, defanging the SEC, FTC, and others, government spending cuts, tax cuts, and a focus on technologically enabled innovation are likely to turbocharge the US economy,” she said, in sharing a video posted by ARK Invest on X on Nov. 11. “We have more clarity now in terms of the investment landscape after the election,” 

‘Defanging the SEC’ may turbocharge US economy: Cathie Wood

The turmoil in global markets this past week is causing private credit funds to question whether they should reconsider the ever-tighter loan margins they’re demanding. Industry stalwarts such as Ares Management Corp. and Blackstone Inc. have been charging less for private credit for most of this year, according to data compiled by Bloomberg News, as they try to snatch business away from the syndicated loan market. But that strategy may change after recession fears have risen amid a slew of worrying economic reports. 

Private Credit Is Eyeing Bigger Margins on Loans: Credit Weekly

Companies owned by private equity firms are landing in default more frequently than other speculative-grade borrowers, according to a report from Moody’s Ratings. Private equity-backed companies defaulted at a rate of 17% between January 2022 and August of this year, twice the rate of non-private equity-backed companies, Moody’s said in the report released Thursday. Among the 12 largest private equity sponsors — as ranked by Moody’s — the default rate was slightly lower at around 14%.  Platinum Equity had the highest number and share of defaults, out of Moody’s ranking of the 12 largest sponsors, followed by Apollo Global Management and Clearlake Capital Group. 

PE-Backed Firms Suffering Higher Default Rates, Moody’s Says

Guernsey stock exchange now provides a facility for trading shares in privately held companies. A stock exchange based in the Channel Islands is trying to capitalise on a global drought in initial public offerings with the launch of a facility for buying and selling shares in privately held companies. But this reinvention of its role looks likely to attract stiff competition from larger rivals. The International Stock Exchange (TISE) — which has, for years, specialised in providing a listing venue for corporate debt — last year launched a unit allowing private companies to run auctions in their own shares, without the need for a broker.


TISE finds best place to capitalise on private assets

Klarna, which is known for its popular buy now, pay later business, said Wednesday it has confidentially filed IPO documents with the SEC. Analysts recently valued the company in the $15 billion range. Klarna investors include SoftBank, Sequoia Capital and London-based firm Atomico.

Buy now, pay later provider Klarna says it filed confidentially for U.S. IPO

Launched in July 2023, the Federal Reserve's FedNow service has been a game-changer in the U.S. payments landscape. With over 900 financial institutions onboarded, including major players like Chase and Wells Fargo, FedNow is reshaping the future of payments in the U.S. FedNow represents a significant shift from the traditional Automated Clearing House (ACH) system to real-time payments, ensuring transactions are processed instantly, 24/7/365. ACH, while effective, typically requires one to two business days for transaction completion. In contrast, FedNow processes payments in seconds, offering a faster and more efficient alternative that aligns the U.S. with global payment standards. 

One Year Since the FedNow Launch: What You Should Know

Prospect, an $8 billion private credit fund, saw $417 million in realized losses for the year ended on June 30, up from $41 million the year before, according to regulatory filings. About $181 million in realized losses were tied to a single investment in PGX Holdings Inc., also known as Progrexion, which filed for bankruptcy in 2023.  S&P said it revised its outlook because of concerns over levels of non-accruals, or loans on which lenders are at risk of losing money, and payment-in-kind income, which it said was higher than its peers. While S&P kept Prospect’s rating steady at BBB-, the lowest tier considered investment-grade, it said it could downgrade the rating if portfolio performance deteriorates.

S&P Puts $8 Billion Prospect Fund on Negative Outlook

Authorised Push Payment (APP) fraud continues to be one of the most pressing concerns for financial services, the payment industry, law enforcement and the general public – and new developments in cross-border payments may be making it easier. A new study by The Payments Association, the UK’s community and advocate for the payments industry, highlight how the speed and anonymity of cross-border payments, and the global patchwork of different regulatory regimes, is being exploited by criminals. APP fraud is easy to understand and, unfortunately, equally easy to carry out. Essentially, APP fraud is any type of fraud that uses an Authorised Push Payment – whenever a person is tricked into voluntarily sending a payment to another person. 

Cross-Border Payments Could Further Enable APP Fraud, Says Payments Association Study

Interest rates are coming down, but only after one of the most brutal monetary tightening periods in modern history. And they’re probably coming down too late, too little and too slowly for a lot of smaller companies and the investment funds that chucked money at them over the past few years. Private credit — basically, bilateral corporate loans made by specialist investment funds rather than banks — has been one of the hottest asset classes over the past decade. Possibly the hottest. Depending on who you believe, there’s somewhere between $2tn and $3tn of money in private credit funds.


How is private credit weathering its first big rate hiking cycle?

A Bitcoin-related bill is gaining support in the United States, signaling a potential boost for the cryptocurrency’s value, which could hit $1 million. Former President Donald Trump’s victory in the 2024 presidential election on Nov. 5 has sparked optimism for more crypto-friendly policies.
One of the most anticipated bills is the Bitcoin Act, championed by Wyoming Republican Senator Cynthia Lummis, which proposes the creation of a strategic Bitcoin BTC tickers down $98,418 reserve for the US, making it the first nation to use it as a “savings technology.”

US Bitcoin reserve during Trump presidency could pump BTC to $1M

A group of private credit lenders led by Blue Owl Capital and Ares Management has agreed to take over troubled software company Pluralsight, wiping out $4bn that Vista Equity Partners and other investors had put into the business since they bought it less than four years ago. The closely watched restructuring is one of the biggest in which the creditors that ultimately take control are also so-called direct lenders. The deal values Pluralsight at about $900mn, far below the more than $5bn that Vista, its partners and private lenders had invested or lent to the business. Vista and its co-investors had sunk roughly $4bn into Pluralsight, while lenders provided it with about $1.7bn of debt financing.


Vista and co-investors lose $4bn in Pluralsight restructuring

Blackstone (BX.N), beat Wall Street's expectations on its key quarterly earnings metric on Thursday, as the world's largest alternative investment firm's assets under management (AUM) hit a record $1.1 trillion and the value of its funds rose. New York-based Blackstone said it saw $41 billion of inflows during the third quarter, while it deployed and committed $54 billion of capital - the highest in over two years - amid a revival in dealmaking activity as the U.S. Federal Reserve cut rates and the economic outlook remained sanguine. Over the past few quarters, high interest rates had been a drag on some aspects of Blackstone's business. With the Fed now entering into an easing cycle, the firm saw that weight starting to lift.

Blackstone tops profit estimate as its assets hit record, dealmaking picks up

In a significant move to counteract international sanctions and reduce dependency on the global financial system Swift, Russia has called on BRICS nations to establish a new cross-border payments network, reported Bloomberg. This initiative is aimed at facilitating transactions in local currencies and strengthening economic ties within the bloc. The proposed network would involve a consortium of commercial banks capable of executing transactions in the respective local currencies of BRICS countries. It also suggests the establishment of direct connections between central banks to further insulate the group from external financial systems.

Russia proposes Swift alternative for cross-border payments

Mastercard introduced a new solution that will enable banks to facilitate commercial cross-border payments that are near real-time, predictable and transparent. The new Mastercard Move Commercial Payments is designed to simplify operations, optimize liquidity, reduce counterparty risk and provide end-to-end visibility for banks and their customers, the company said in a Monday (Oct. 21) press release.

Mastercard Introduces New Commercial Cross-Border Payment Solution for Banks

State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT), announced today that it is working with Apollo Global Management, Inc. (NYSE: APO), a leading provider of alternative assets and retirement solutions, and its affiliates (collectively, Apollo), to expand investor access to private market opportunities. "Private assets are one of the fastest growing sectors of the financial industry. We are excited to be working with Apollo, a global leader in alternative assets, to continue to increase accessibility to private markets, opening them to an even larger cross section of investors," said Ron O’Hanley, president and chief executive officer of State Street. 

State Street Global Advisors and Apollo Global Management Join Forces to Increase and Broaden Investor Access to Private Markets

Stripe, the FinTech giant, is reportedly in talks to acquire crypto startup Bridge for $1 billion, according to sources familiar with the discussions. This potential acquisition would be the largest to date for Stripe, which was recently valued at $70 billion. However, the deal is still under discussion and subject to regulatory considerations and compensation for employees. 
Bridge, a provider of infrastructure for crypto stablecoins, has previously raised $58 million in funding and has a strong customer base that includes government departments and companies like SpaceX and Coinbase. The startup offers software that enables businesses to accept cross-border payments made with stablecoins. 

Stripe Aims for Largest Acquisition Yet with $1 Billion Deal for Bridge

Growth in the payments industry, which was once characterized by rapid expansion, is now slowing as the shift from cash to digital payments has reached its peak, according to BCG research. The BCG Global Payments Report 2024 found that revenue growth is expected to halve by 2028, with global revenues set to rise at a compound annual growth rate of just 5% to $2.3 trillion. This marks a sharp decline from the 9% growth recorded in the previous five years, which saw revenues to $1.8 trillion in 2023.

Payments Industry Growth Slows as Cash-to-Digital Shift Reaches Peak

BlackRock has a handshake deal to buy private credit group HPS Investment Partners, the Financial Times reported on Wednesday. The final deal value would be closer to $12 billion, which offers a significant premium over HPS's post-IPO valuation of $10 billion, the report said, citing two sources familiar with the matter. The two sides have agreed on the broad outline of the deal with an eye towards announcing general terms after the U.S. Thanksgiving holiday, the report added, citing four people familiar with the matter.

BlackRock has deal to buy private credit manager HPS, FT reports

Recent and upcoming rate cuts will provide relief for private credit borrowers through lower funding costs in 2025, even as many have already benefitted from repricing and improving financing conditions. 

How This Will Shape 2025 
Repricing will continue to change market dynamics. Companies should see a bigger benefit from rate cuts in 2025 than this year. Competition and convergence between public and private markets will continue. With growth and innovations in private markets, some borrowers have the luxury of choice between broadly syndicated or private credit. 

Private Markets: How Will Private Credit Respond To Declining Yields?

 Inflation in the euro area rose from 1.7% to 2% in October, flash figures showed Thursday, coming in slightly higher than the 1.9% forecast. Core inflation and services inflation were both unchanged on the previous month. Markets currently expect the European Central Bank to cut interest rates by another 25 basis points in December, with one analyst saying the latest data would end debate over whether a larger 50-basis-point cut is warranted.

Euro zone inflation rises to higher-than-expected 2%, weakening case for jumbo rate cut

Melio, an accounts payable and receivable platform for small and medium businesses, has hit a $2 billion valuation in a $150 million strategic funding round led by Fiserv. Shopify Ventures, Capital One Ventures, Accel, Bessemer, Coatue, Frontline Ventures, General Catalyst, Latitude and Thrive Capital joined the Series E for New York-based Melio. The funding follows a ten-fold increase in revenue since the last $110 million round three years ago. Melio’s platform integrates cash flow management, accounts receivable and accounts payable solutions to help SMBs - and their accountants - maximise cash flow and save time managing their payment operations.

Fiserv leads $150m funding round for Melio

Transak has received its second Money Transmitter License (MTL) from the US state of Delaware, while also gaining registration with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). The MTL will allow Delaware residents and businesses to use the cryptocurrency platform. Transaks first MTL came from the Alabama Securities commission and the company stated they intend to continue to expand across the US. 

Transak gains Delaware Money Transmitter License and FINTRAC registration

The majority of public pension funds and sovereign wealth funds (58%) expect to increase their infrastructure allocations over the next 12 to 24 months, according to the OMFIF’s Global Public Funds 2024 report. The Official Monetary and Financial Institutions Forum is a forum for central banking, economic policy and public investment. Twenty-eight global public funds with a combined $6.5 trillion in assets. This is up from 53% that had the same expectation in last year’s survey and 42% in 2022. 

Most global public funds plan to increase infrastructure allocations — OMFIF report

The US Department of Justice (DOJ) has filed a civil antitrust lawsuit against Visa over allegations of “monopolisation and other unlawful conduct in debit network markets in violation of Sections 1 and 2 of the Sherman Act”. In a press release announcing the lawsuit on 24 September, the DOJ says: “Filed in the US District Court for the Southern District of New York, the complaint alleges that Visa illegally maintains a monopoly over debit network markets by using its dominance to thwart the growth of its existing competitors and prevent others from developing new and innovative alternatives.”

US Department of Justice files civil antitrust lawsuit against Visa

The National Center for Public Policy Research — a Washington DC-based think tank championing free markets — submitted a shareholder proposal to Amazon saying that a Bitcoin corporate treasury strategy should be considered at the April 2025 shareholder meeting.
According to the proposal, the Consumer Price Index (CPI) used to measure inflation, which currently puts inflation at 4.95%, is a “remarkably poor measure” of true currency debasement. The authors suggested the true inflation rate may be double the reported CPI figure. This greatly erodes Amazon’s $88 billion in cash and short-term cash equivalents, the letter said, and to protect shareholder value, Bitcoin should be used to hedge against this risk. 

National Center for Public Policy Research proposes BTC treasury to Amazon

PayPal Holdings, Inc. (NASDAQ: PYPL) announced it is enabling its U.S. merchants to buy, hold and sell cryptocurrency directly from their PayPal business account.  At launch, this functionality for Business Accounts will not be available in New York State. Today's announcement is PayPal's latest step to increase cryptocurrency's utility by making increased functionality available to millions of merchants in the U.S. 

PayPal lets US business accounts buy and sell crypto

Collectively, Americans now owe a record $1.17 trillion on their credit cards, according to a new report on household debt from the Federal Reserve Bank of New York. Credit card balances rose by $24 billion in the third quarter of 2024 and are 8.1% higher than a year ago.Despite that increase, credit card delinquency rates improved — with 8.8% of balances transitioning to delinquency over the last year, compared with 9.1% in the previous quarter, the New York Fed found. That change could “suggest that rising debt burdens remain manageable,” the New York Fed researchers said on a press call Wednesday.

Credit card debt hits record $1.17 trillion, New York Fed research shows

Guggenheim Investments, the asset-management arm of Guggenheim Partners, is seeking to raise at least $1.5 billion for its newest private credit fund, according to people with knowledge of the matter.

Guggenheim Targets $1.5 Billion for New Private Credit Fund

Marathon Asset Management, a leading global credit investment manager, today announced the final close for the third vintage of a closed-end asset-based lending fund with $1.7 billion of capital commitments.  As traditional lenders have downsized their lending programs, Marathon’s ABL strategy is designed to pursue compelling returns for clients by creating a diversified portfolio through sourcing, underwriting, and structuring attractive private investments that exhibit principal protection, robust asset coverage and predictable cashflows. , Marathon also intends to capitalize on the secondary loan market opportunities, as select undercapitalized financial institutions seek to improve their financial condition through asset sales.

Marathon Asset Management Closes $1.7 Billion Asset-Based Lending Fund

Corporate spend management giant Brex has laid off 282 people (20% of its workforce) and revealed that its COO and CTO are leaving their roles.In a message to employees, shared on the company's blog, co-CEO Pedro Franceschi says the job cuts as part of a restructuring to become a "high-velocity company". Franceschi says the axe is being wielded following a hard look at the company's structure that will result in fewer management layers.

Brex axes 20% of staff

Goldman Sachs Asset Management is reportedly planning a major expansion of its private credit portfolio. The Wall Street giant aims to grow that portfolio to $300 billion in five years, up from $130 billion, a senior executive told Reuters Tuesday (March 12). “It’s a huge opportunity,” said Marc Nachmann, Goldman Sachs’ global head of asset and wealth management. According to the report, Goldman has loftier goals than other banking titans. For example, Morgan Stanley is planning to double its private credit portfolio to $50 billion, while JPMorgan Chase has set aside at least $10 billion for private credit. 

Goldman Sachs Aims for $300 Billion Private Credit Portfolio

Temenos shares were down over 6% on Friday after closing over 28% lower on Thursday.
The Swiss software company said its board of directors “fundamentally refutes” a report by short-seller Hindenburg Research. Short-seller Hindenburg Research made headlines after accusing Indian conglomerate Adani of stock manipulation and accounting fraud in early 2023.

Hindenburg’s latest short target Temenos rejects allegations as share price tumbles

The $1 billion-plus injection that New York Community Bank announced Wednesday is the latest example of private equity players coming to the need of a wounded American lender. Key to these deals is speed and discretion, according to advisors to several recent transactions and external experts. Steven Mnuchin reached out to NYCB directly to offer support amid headlines about the duress it was under, according to a person with knowledge of the matter.

Why private equity has been involved in every recent bank deal

In the six months following its groundbreaking launch in July 2023, FedNow has emerged as a transformative force in real-time payments, marking a significant departure from the traditional Automated Clearing House (ACH) system.  This shift signifies a pivotal moment in banking innovation, offering instantaneous transaction processing that aligns with the modern financial transaction demands.

How FedNow is Shaping Payments Since its Groundbreaking Launch

The Federal Reserve is stressing the importance of fintechs and core providers for the future expansion of its new instant payments system FedNow. The Federal Reserve won’t provide fintechs with direct access to its new instant payments system FedNow, but it’s still courting their participation in the new real-time ecosystem. 

Fintechs can help the Fed see what’s on the horizon for the new faster payment system and allow the new real-time payments services to be easier to use, said Mollie Markham, a Federal Reserve Bank of Chicago industry specialist who works with nonbanks. Fintechs can also assist the Fed in providing services that make the most of FedNow’s data-rich capabilities, she said during a conference this month.

Fed courts nonbanks for FedNow growth

Private equity firms including Apollo Global, KKR, Blackstone and Brookfield are accelerating efforts to make low-risk loans, encroaching on territory dominated by banks and public debt markets. New York-based group Apollo on Thursday increased its long-term forecasts for its lending business, telling shareholders it expected to be able to originate more than $200bn a year in new loans, up from $150bn previously. This compares with $97bn issued last year including to investment grades European group Vonovia and Air France-KLM. Volumes reached a record $40bn in the first quarter of 2024, it said.


Private equity firms step up plans to edge banks out of low-risk lending

The Consumer Financial Protection Bureau declared on Wednesday that customers of the burgeoning buy now, pay later industry have the same federal protections as users of credit cards. The agency unveiled what it called an “interpretive rule” that deemed BNPL lenders essentially the same as traditional credit card providers under the decades-old Truth in Lending Act. The BNPL market is dominated by fintech firms like Affirm, Klarna and PayPal.

CFPB says buy now, pay later firms must comply with U.S. credit card laws

JPMorgan Chase CEO Jamie Dimon said private credit could spark turmoil if the opaque sector of financial markets weakens. "There could be hell to pay," he said at a conference on Wednesday. "I've seen a couple of these deals that were rated by a rating agency and, I have to confess, it shocked me what they got rated. So, it reminds me a little bit of mortgages."

Jamie Dimon says there could be 'hell to pay' if the swelling private-credit market starts showing cracks

After months of business leaders and economists urging action, the People’s Bank of China (PBoC)—the central bank of the world’s second biggest economy—finally acquiesced, unleashing a triptych stimulus package aimed at spurring consumer spending to counter persistent deflation. Yet analysts doubt even this “policy bazooka” will have much of an effect. 
On Tuesday, the PBoC unveiled a policy interest rate cut of 0.2 percentage points, combined with a lowering of banks’ reserve requirements and the cutting of existing mortgage interest rates, both by 0.5 percentage points. For the PBoC to unveil three rate cuts at once is itself unprecedented. 

China’s Bold Stimulus Measures Won’t Save Its Flagging Economy

FTX has reportedly sued former Trump administration official Anthony Scaramucci to recover creditor funds. The suit was one of several filed by the bankrupt cryptocurrency company in its efforts to claw back money owed to its creditors, TechCrunch reported Saturday (Nov. 9). In addition to Scaramucci’s SkyBridge Capital, other defendants include Crypto.com and Fwd.us, a lobbying group backed by Mark Zuckerberg. According to the report, FTX says it is seeking to recoup money that was part of “a campaign of influence-buying” by founder and CEO Sam Bankman-Fried, carried out as the company was struggling to cover its cash flow needs. 

FTX Sues Anthony Scaramucci to Recover Creditor Funds

Private investment group Sixth Street will pump $4bn into a vehicle to buy loans from US fintech Affirm in a deal that will give the lender firepower to make billions of dollars in additional consumer loans.The pact, which is expected to give Affirm the ability to make $20bn in new loans in the next three years, is the latest tie-up between a private credit fund and consumer credit provider, as the industry taps new avenues to lend to Americans struggling from years of high inflation.The structures allow companies such as Affirm and Sweden-based Klarna — which specialise in “buy now, pay later” loans — to offload debt they have underwritten from their balance sheets, shifting the risks to investors. 


Sixth Street pact hands Affirm firepower for $20bn in new consumer loans

Regional banks around the U.S. are striking complex and costly bargains with hedge funds, hoping to insulate themselves from a replay of the turmoil that followed Silicon Valley Bank’s failure last year. Wall Street smells a payday. Ohio-based Huntington Bancshares recently entered into an arrangement to sell investors some of the risk that its borrowers won’t repay their loans. That helps the bank meet new proposed standards meant to make lenders look healthy to regulators.  The deal is known on Wall Street as a synthetic risk transfer, and it offers cash-flush, private-debt fund managers—such as Ares Management and Blackstone—an attractive investment. 

Regional Banks Want to Slim Down. Hedge Funds Smell a Bargain.

Blackstone plans to double the size of its European private credit fund in the next year after raising €1bn from the region’s rich to invest in the booming $1.7tn market in private corporate loans. The private equity giant has taken nearly two years to reach the milestone following the 2022 launch of its European Private Credit Fund, known as ECRED, which aims to replicate the success of its $54bn US flagship fund.


Blackstone draws €1bn into European private credit fund

The Bank of England joined the growing list of policymakers and market participants concerned about the booming $1.6-trillion private credit market. The central bank’s Financial Policy Committee on Wednesday highlighted riskier types of corporate borrowing such as private credit and leveraged lending as particularly vulnerable to “sharp revaluations” in credit markets, as higher interest rates could make it harder for companies to refinance debt.

Bank of England Issues Warning on Private Debt, Leveraged Loans

Sports investment group Arctos Partners is in advanced talks to buy a majority stake in European credit investment shop Hayfin Capital Management in tandem with its top executives, according to people with knowledge of the matter.  Arctos has partnered with top Hayfin executives, including co-founders Tim Flynn and Mark Tognolini, in the deal, which is expected to hand a majority of the common stock owned by the British Columbia Investment Management Corporation (BCI) to the management team when it is completed. 


European credit group Hayfin Capital nears buyout deal

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