Recession Odds at 49% and Record Private Credit Sales Pressure Goldman Sachs
Moody’s AI model pegs U.S. recession odds at 49%, one point below the 50% trigger, as 20% of oil output is disrupted and prices top $100. Record private credit loan supply outpaces demand, with most offers at par as Goldman Sachs and peers struggle to generate liquidity.
1. Recession Model Near Historic Signal
Moody’s AI-driven recession model currently assigns a 49% probability to a U.S. recession, just one percentage point below the historic 50% threshold that has preceded every downturn in the past 80 years. February inputs incorporate revised-down GDP growth of 0.7%, a 92,000 drop in payrolls, and elevated inflation, but exclude disruptions to 20% of global oil output and prices above $100. Analysts warn the model is poised to breach the trigger once oil war impacts are fully reflected.
2. Private Credit Market Strain and GS's Role
Secondary market listings for private credit loans have surged to record levels as elevated BDC redemptions drive a flood of supply, yet trading demand remains thin. Most loan offers are at or near par, widening bid/ask spreads and limiting execution, while Goldman Sachs and peers such as Morgan Stanley, JPMorgan and Jefferies are dispatching sale runs to gauge interest. Market participants report that difficulty matching buyers with high-volume unitranche deals, especially in software, is hampering liquidity.