“I do believe that when we have a credit cycle, which will happen one day, losses on all leveraged lending in general will be higher than expected, relative to the environment,” Dimon said.
“It has always been true that not everyone providing credit is necessarily good at it.
“We have not had a credit recession in a long time, and it seems that some people assume it will never happen.”
Fisher Funds portfolio manager – credit, Matt Logan, said deteriorating underwriting standards and shaky loans to software companies had understandably caught the attention of New Zealand investors.
Kiwi investors
So how worried should Kiwi investors be?
“It helps to start with what private credit is because the reality is quite simple,” Logan said.
“At its core, it’s businesses borrowing money.
“The difference is that instead of banks or public bond markets providing the capital, asset managers are increasingly lending directly to businesses on behalf of their clients, capturing more of the return in the process.
“That simplicity matters when assessing the risks driving the news.
“The headlines are largely about the US market, where rapid growth has led some managers to compete aggressively for deals, loosening lending standards in the process.”
More recently, loans to software companies have also raised concerns during the so-called “Saaspocalypse”, as rapid advances in AI raise questions about the resilience of traditional software business models.
“These are legitimate concerns, and it’s likely that some of these loans will default,” Logan said.
“But the crucial distinction from previous financial crises is where those losses will land.”
During the Global Financial Crisis, stress on highly leveraged bank balance sheets fed directly into the real economy, restricting everyday lending and triggering a damaging feedback loop, but Logan said private credit is structurally different.
Losses are borne by the investors and asset managers who knowingly signed up for the risk, not by the banking system.
“Leverage across the sector is well below levels seen in pre-GFC bank balance sheets, and the capital is largely committed on long-term mandates that don’t require forced selling.
“This doesn’t make losses painless, but it does limit the contagion risk.
“For New Zealand, and particularly KiwiSaver members, the direct exposure is minimal.
“Most KiwiSaver schemes do not have an explicit allocation to private credit, and even those that do tend to hold modest positions.
“It’s a reflection of how New Zealand generally takes a more cautious approach to financial innovation, even if it comes at the cost of slightly lower returns,” he said.
Paid to worry
Craigs Investment Partners investment director Mark Lister said it was not the first time Dimon had sounded a warning on private sector credit.
“It is something to be concerned about and it’s probably a bit more of a slower burn risk,” he said.
“But the private credit stuff probably isn’t going away any time soon.
“New Zealanders don’t necessarily invest in private credit in a big way, so it’s not the same sort of risk that came from the finance company debacle 20 years ago.
“A really important point to make is that private credit operators in New Zealand are actually quite sensible.”
Lister said Dimon, who heads one of the world’s biggest banks, is paid to worry.
“He’s a risk manager at the end of the day and he’s a bank CEO, so he will always be glass half empty.”
T&G rumours
Rumours continue to swirl around NZX-listed fruit and veg company T&G Global.
T&G said last July it was going through a process to consider its strategic options.
“As part of this, we are exploring whether, if at a potential stage in the future, it is appropriate to explore any form of sales process for any of T&G’s divisions,” T&G said in a supplied statement this week.
“This process is still underway and no decision has been made. We’re aware of a number of inaccurate rumours in the market.”
The Australian Financial Review’s Street Talk speculated that T&G was weighing a break-up of its T&G Fresh subdivision.
This included T&G Fresh’s root vegetable business, its Pacific Islands fruit and vegetable distribution businesses, including Fiji, and its wholesale produce trading business, the AFR said.
In February, T&G said its net profit for calendar 2025 came to $16 million, up from a $9.9m loss in 2024.
Box office trends
Brokers Forsyth Barr said US domestic box office trends have started 2026 on a firmer footing, providing some support after a weak end to 2025, which should be positive for cinema software company Vista Group.
“For Vista Group, where a meaningful quarter of revenue is linked to gross transactional value, this shift from drag to potential tailwind is modestly supportive.
“However, the recovery remains uneven and still reliant on a stronger run-rate through the balance of the year, albeit underpinned by a favourable release slate,” Forsyth Barr analysts said in a note.
“Ticket volumes have remained subdued, reinforcing our view that the industry is recovering slowly post-Covid.
“As such, while recent data is encouraging, key assumptions underpinning 2026 expectations are not yet de-risked.”
Against this backdrop, VGL had “de-rated materially” alongside global tech and SaaS (software as a service) stocks.
“Still, we see it retaining a defensible technology moat, underpinned by its deeply embedded, mission-critical role in cinema workflows,” Forsyth Barr said.
The broker rates Vista as “outperform”.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.
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