Bernard Mensah of Bank of America Corp. Calls Private-credit Strain “a Very Good, Healthy Cleanup”

With input from Bloomberg, the Financial Times, the Wall Street Journal, and Puck.

Parts of the private-credit market are creaking — and Bank of America’s international boss thinks that’s not a disaster so much as a long-overdue spring cleaning.

A string of private-credit funds has frozen redemptions in recent weeks, sparking jitters about hidden credit risks in the roughly $1.8 trillion market that ballooned over the last decade. Investors are nervous because when cash stops flowing, who knows what sketchy loans or shaky deals might be lurking on fund balance sheets.

Still, Mensah sees opportunity. He told Bloomberg the strain could force bad bets out of the system and leave the sector healthier once the dust settles. Translation: painful for some, but useful for the rest. Bank of America, he added, isn’t backing off — the bank plans to keep investing in private credit even as others hit the brakes.

Why this matters: private credit is big, opaque and grownups-only — attractive yields drew capital in, but limited transparency means stress can spread fast. When funds gate redemptions, managers get time to sell assets more orderly — but investors lose liquidity, and that’s the real sting.

Don’t expect a bailout for every struggling fund. Mensah’s view is that pruning the weakest players now could make private credit sturdier later — a messy cleanup rather than a market meltdown. Whether regulators, managers and limited partners see it the same way is the next chapter to watch.