Morgan Stanley Sees Record Private Loan Sales While Flagging 20% Tech Drawdown Risk
Morgan Stanley is facilitating record private credit loan sales via BWIC lists as banks grapple with oversupply and thin secondary demand at par pricing. MS analysts also warn semiconductor stocks face 20% de-rating risks if Middle East conflict extends, oil stays above $100, and earnings are revised lower.
1. Market-Making in Private Credit Loans
Morgan Stanley joined Goldman, JPMorgan, and Jefferies in sending BWIC lists to buy or sell private credit positions as unprecedented loan volumes hit the secondary market. Despite elevated BDC redemptions driving supply, buyers remain scarce, forcing MS to list loans at or near par with wide bid/ask spreads.
2. Tech Sector Downside Warning
MS analyst Shawn Kim highlighted a 20% de-rating in the Philadelphia Semiconductor Index since the Middle East conflict began and noted global tech earnings rose 6%. He cautioned that further downside hinges on conflict duration, oil staying above $100, and potential earnings cuts, drawing parallels to 30% drawdowns seen in 2008 and 2022.