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Goldman Sachs’ chief executive David Solomon has said that concerns about private credit in recent weeks should serve as a reminder to investors that “the credit cycle has not been repealed”, underscoring the wariness on Wall Street around non-bank lending.
An unusually long period of cheap borrowing with low default rates followed the 2008 financial crisis.
But worries are growing that the credit cycle could be about to turn due to the private credit industry’s large exposure to tech companies whose businesses may be disrupted by artificial intelligence.
In his annual letter to shareholders, Solomon said that the investment bank was “optimistic about the operating environment” in 2026 but cautioned that it was “not hard to come up with scenarios where risks become a lot more pronounced”.
“In recent weeks, for example, concerns about private credit, including underwriting quality or exposure to software companies that may be adversely affected by AI, are a reminder that the credit cycle has not been repealed,” Solomon wrote.
“Higher levels of market volatility across various risk assets, elevated geopolitical uncertainty, and greater capital deployment, especially into AI, require diligent risk management.”
His comments come after rival JPMorgan Chase clamped down on its lending to private credit groups as concerns mount over the credit quality of companies in their portfolios.
Despite concerns over private markets and the US-Israeli military strikes in Iran sending the price of oil soaring, Solomon said Goldman still saw “the potential for a more constructive operating environment” for dealmaking in 2026.
He pointed to government stimulus in developed economies, looser monetary policy, spending on AI infrastructure and less regulatory oversight in the US.
“Put together, these are very powerful catalysts for people who own, transact, and invest in risk assets,” Solomon wrote.
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