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Fluence Energy (FLNC) falls 4.2% in Friday’s trading as Jefferies downgraded shares to Hold from Buy with a $7 price target, slashed from $19, anticipating “a challenging path forward” amid new questions about future customer confidence and liquidity after the energy storage company
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Nestle (NSRGY) is reviewing its options after Russia placed the Swiss food company’s local operations under temporary state administration, adding to mounting pressure on Western businesses that still hold assets in the country.
The move was announced in a presidential
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Britain’s most valuable private company has clarified where it intends to sell its shares.
Nik Storonsky, Revolut’s founder and CEO, told French newspaper Les Echos on Thursday that the group is weighing a dual listing across the London Stock Exchange and the Nasdaq, confirming earlier media reports.
A spokesperson for Revolut confirmed the report to Euronews.
The US remains Storonsky preference, and he was candid about why, stating that “it’s a larger market. It includes institutional investors, hedge funds, fund managers and a considerable number of individual investors.”
“So we have the choice between selling in a small market with few buyers, or in a gigantic market with a huge number of buyers who will compete fiercely for our shares,” Storonsky added.
The comments mark a softening.
The Revolut CEO argued in 2024 that the London Stock Exchange simply could not compete with American venues, citing thin liquidity and the UK’s 0.5% stamp duty on share purchases, and had appeared to rule out listing at home altogether.
The London exchange has endured a prolonged drought of new listings, with companies either staying private or heading west. For instance, payments group Wise moved its primary listing to New York this year, and AstraZeneca has also expanded its presence in the US.
Revolut going public at anything near its current valuation would make it one of Britain’s largest listed companies, potentially worth more than Barclays or NatWest.
A secondary share sale in July valued the business at roughly $115 billion (€100bn), up from $75 billion (€65bn) in November.
When asked by Euronews about internal discussions regarding a timeline for the IPO, the spokesperson refused to comment, but pointed to a previous interview with Bloomberg in April of this year where the Revolut CEO stated “in two years time, but it depends on how good the market is.”
Progress as certainly been made as the company has spent this year assembling the regulatory foundations a listing will require.
It secured a full UK banking licence in March after a long wait that Storonsky has publicly blamed on British regulators, obtained a French licence in August, received conditional approval for a US national bank charter this month, and announced on Wednesday that it had applied for a Swiss licence alongside plans to invest more than 150 million Swiss francs (€158m) there.
Revolut has not stated which venue would host the primary listing, whether the two would happen simultaneously, or when formal preparations might begin.
Investors, though, continue to debate the true cost of owning private credit funds.
This article appears in the September 2026 issue of Global Finance Magazine.
For the first time since the Covid-19 pandemic, private credit’s headline management fees are returning to historical norms.
According to data analytics firm Preqin’s latest fund-terms report, direct-lending funds raised in 2025 charged a mean management fee of 1.42% and a median of 1.50%, essentially matching the asset class’s long-term 2005-2025 averages of 1.43% and 1.50%, respectively.
That marks a sharp reversal from the post-pandemic doldrums, when managers cut prices to compete for a shrinking pool of investor capital amid weak fundraising and slow distributions. The median fee on direct lending funds fell to just 1%, and the mean sank to historic lows of 1.25% to 1.32%.
Now, competition for capital appears to be easing at the top of the market, while headline prices tick higher. However, beneath the headline numbers, what investors are paying is a more complicated matter.
“The headline management fee tells you very little about what investors actually pay,” said Ludovic Phalippou, a professor of financial economics at Oxford University’s Saïd Business School. “I expect the true all-in cost to be very high.”
Chad Timko, senior investment officer at the Los Angeles County Employees Retirement Association (LACERA), one of the largest U.S. public pension funds, valued at $93.9 billion, made a similar point from the practitioner’s perspective: “How a manager pays for performance can be just as important as the performance itself.”
The share of LPAs offering early-investor or large-commitment discounts also fell, from 41% of 2016-2018 vintages to 33% of 2022-2024 vintages. Source: Preqin’s Term Intelligence, data as of March 2025.
The reversal in headline fees isn’t happening evenly. Preqin’s data links it directly to performance. For funds raised between 2015 and 2019, top- and bottom-quartile managers charged nearly identical fees, averaging about 1.42%. For 2020-24 vintages, that changed; top-quartile funds held their fees near 1.42%, while fees in the lower three quartiles fell to between 1.24% and 1.29%.
Behind that split lies a market that has become sharply concentrated among a small number of managers. Two-thirds of all private-credit capital raised in 2024 went to the 20 largest funds, up from less than half in 2020, according to Preqin.
Average fund size has continued to climb for experienced managers, but first-time managers’ fund sizes have remained flat at roughly $120 million for five years. Fee discounts have followed the same pattern; the share of fund agreements offering early-investor or large-commitment discounts fell from 41% for 2016-18 vintages to 33% for the 2022-24 period, and the size of those discounts has also shrunk.
Some investors view the buildup of capital among top managers as a warning sign. Pension money pouring into private credit in recent years has “got out of hand,” loosening underwriting standards across the industry, said Mark Steed, CIO of the $25.8 billion Arizona Public Safety Personnel Retirement System. “There’s going to be a shakeout.”
Investor sentiment has grown more cautious even as realized results tick up. In Preqin’s most recent survey, 35% of institutional investors called private credit assets overvalued, up 16 percentage points year-over-year, and 37% expect performance to soften over the next 12 months, chiefly citing the path of interest rates.
Similarly, PwC’s 2026 global private credit survey identified ongoing fee competition among managers as a top concern heading into this year.
Capital concentration isn’t unique to developed private credit markets, either, though it takes a different shape elsewhere. India’s private credit market grew 35% year over year in 2025, to roughly $12.4 billion.
“Domestic funds represented over 64% of total deal value, pointing to the increasing depth of local capital,” noted Syed Hasan Jafar, vice dean of the School of Business and head of the Department of Finance at Woxsen University.
Despite the recorded uptick in fees, it remains unclear whether investor expenses are moving along with the trend.
Preqin’s figures track the headline contractual management fee rate written into a fund’s limited partnership agreement (LPA) at formation: not fund expenses, fee offsets, transaction and monitoring charges, or, in newer semi-liquid vehicles, fees calculated on NAV rather than committed capital.
“We still do not have a reliable measure of total expense ratios in private credit,” said Oxford’s Phalippou. The problem is structural, he said. “Private credit has essentially inherited the same fee model as private equity, so the transparency problems are very similar. In semi-liquid products, the situation can actually be worse because some fees are calculated based on NAV. That creates additional opportunities for gaming.”
Despite the increase in headline fees, alternative investment adviser and fund manager Cliffwater’s 2025 survey of direct lending funds found total blended costs — management fees plus incentive fees and expenses — roughly flat or lower, not higher. Proskauer’s most recent private credit survey shows that commitment and arrangement fees — a separate one-time charge — continue to fall.
Neither Cliffwater’s nor Proskauer’s findings contradict Preqin’s data; they measure different metrics. Together, they suggest that while the sticker price at the top of the market is rising, what investors pay all-in remains unclear.
Resistance to trading private assets more openly “generally means your fee is above where it’s supposed to be, and you don’t want to shine a light on it,” said Apollo Global Management chairman and CEO Marc Rowan.
Phalippou is skeptical, in any case, that investors have much power to push back, regardless of which way headline fees move.
“The uncomfortable truth is that most LPs have very little negotiating leverage,” he said. “For the vast majority of investors, these are effectively take-it-or-leave-it contracts.” The result, he adds, is that fees persist “not because they have been negotiated, but because the market structure allows them to persist.”
LACERA addresses the problem by measuring “investor profit retention,” the share of investment gains it retains after all fees, rather than fixating on the headline management fee rate, Timko said. Because its capital bears the full risk of loss, LACERA expects “to retain a super-majority of the gains generated,” with manager compensation weighted toward a performance fee that pays out only above a hard hurdle rate of cash plus a spread, rather than a flat charge on committed capital.
It is, in effect, a bet that the real fight over cost in private credit is not about the sticker price but about how gains are split once they materialize.
Thomas Monteiro is a contributing writer based in Spain.
SweetBunFactory
China’s ChangXin Memory Technologies (CXMT) is preparing to enter the flash-memory chip market, expanding beyond its core DRAM business as a global memory shortage tightens supply and demand for AI-related infrastructure grows.
CXMT plans to establish a research and development
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Japan’s benchmark Nikkei 225 gained 1.9% to 65,332.57 after the Bank of Japan raised the benchmark interest rate to 1.25% from 1.0%, a 31-year high.
The move had been widely priced in, coming after the Federal Reserve also raised its key rate this week. Pressures have been coming from the US for Japan to raise rates because of concerns about the weakening yen.
The nations intervened together recently to prop up the yen. But the efforts haven’t had a big impact.
In currency trading, the US dollar rose to 157.11 Japanese yen from 155.95 yen. The euro cost $1.1487, up from $1.1480.
South Korea’s Kospi jumped 2.3% to 6,866.83. Australia’s S&P/ASX 200 was little changed, slipping less than 0.1% to 8,731.50. Hong Kong’s Hang Seng edged up nearly 0.7% to 24,769.80, while the Shanghai Composite added 1.0% to 3,916.08.
Falling oil prices and easing pressure from the bond market helped Wall Street reverse many of its losses from the prior day.
The S&P 500 jumped 1.1% for just its second rise in the last nine days. The Dow Jones Industrial Average added 316 points, or 0.6%, and the Nasdaq composite climbed 1.7%.
Wall Street stocks got a boost after the price of a barrel ofBrent crude oil slid from the nearly $110 it reached earlier in the week on worries that the war with Iran will keep oil bottled up in the Middle East instead of going to customers worldwide.
In Asian trading, Brent, the international standard, lost 0.94% to $103.83 a barrel. Benchmark US crude slid 0.83% to $101.06 a barrel.
Brent is still more expensive than the $72 per barrel that it cost earlier this summer, but the recent drop helped pull yields lower in the bond market and removed some pressure on stocks. The yield on the 10-year Treasury fell to 4.93% from 5.01% late Wednesday.
The Federal Reserve on Wednesday raised the short-term interest rate that it controls, the federal funds rate, by a quarter of a percentage point for its first hike in more than three years. Officials also hinted that they may raise the federal funds rate one more time this year as they try to get high inflation in the US under control.
The signals sent Wall Street on a roller coaster. Stocks initially remained higher for the day after the Fed made its announcement Wednesday. They then slid sharply before recovering a chunk of the losses before trading ended.
On the upside for markets, the shift to higher interest rates built confidence that the Fed is committed to getting inflation back to its target of 2%. On the downside for markets, higher rates undercut prices for stocks and other investments.
All told, the S&P 500 rose 85.95 points to 7,637.76. The Dow Jones Industrial Average gained 316.14 to 51,778.04, and the Nasdaq composite rallied 439.87 to 26,418.30.
Additional sources • AP
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Steel producers Nucor (NUE) and Steel Dynamics (STLD) fell 3.7% and 3.4%, respectively, post-market Thursday after both companies issued downside guidance for Q3 earnings.
Nucor (NUE) said it forecasts Q3 earnings of $5.55-$5.65/share, below the FactSet consensus estimate of $5.99/share but
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The European Commission stepped up pressure on China on Thursday, calling for tangible results with Beijing following a one-hour video call between Trade Commissioner Maroš Šefčovič and his Chinese counterpart, Wang Wentao.
The EU executive hopes to secure commitments from Beijing to rebalance the trade relationship, as the bloc’s trade deficit with China has been widening by €1 billion a day.
However, Beijing wants to secure access to the EU’s market of 450 million consumers, resisting calls from the Europeans to reduce its exports.
“While genuine engagement remains a priority, it is equally important that first concrete outcomes are delivered at the second session of the Trade and Investment Council in Beijing in October, which the Commissioner will co-chair – a signal that we are moving from rhetoric to results,” the Commission said in a statement after the call.
“That outcome needs to be credible,” the statement added.
The EU-China Trade and Investment Council was launched in June as a dialogue between the two sides, with the Commission setting October as a deadline to reach tangible results.
During the call on Thursday, Šefčovič and Wentao discussed market access on both sides and Chinese export controls on rare earths.
China has a near-monopoly over the production and processing of these strategic materials, which are essential to the EU’s green technology, defence and automotive industries, giving Beijing significant leverage in the negotiations.
The EU is seeking assurances that China will not halt its exports of rare earths again, a year after blocking them amid a trade war with the US. Securing the necessary export licences is essential for EU businesses.
The coming weeks will be crucial for the negotiations, with EU officials expected to make another trip to China for technical discussions before Šefčovič himself travels to Beijing on 8–9 October.
In her State of the Union address to MEPs on Wednesday, European Commission President Ursula von der Leyen also pushed for concrete results in the EU-China talks.
“Words are good. But deeds are better,” she said, making clear that the EU was ready to use all its trade defence instruments to rebalance the trade relationship.
China is also expected to feature prominently on the agenda when EU leaders meet in October. They have tasked the Commission with securing tangible results from its dialogue with Beijing.
In an interview with Euronews, Šefčovič also made clear that, without a “deliverable” to present to EU leaders,“the political interest would be to look for the solution through other instruments.”
The EU has several trade defence instruments such as anti-dumping duties or tariffs against unfair subsidies.
A diversification tool is also in the pipeline, aimed at reducing EU firms’ reliance on Chinese critical minerals for strategic technologies by helping them diversify their sources of supply.
Such a move would come as relations between Beijing and Brussels remain strained, following the Commission’s introduction of several legislative proposals aimed at protecting the EU market. One of them would introduce a European preference for products made in Europe, prompting China to threaten retaliatory measures.
Last summer, China also urged its companies to stop cooperating with the Commission in antitrust investigations, after the EU executive opened a probe in May into e-commerce giant JD.com over concerns about subsidies.
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The ‘Old Lady of Threadneedle Street’ has chosen to wait, though not unanimously.
The Monetary Policy Committee voted by a majority of six to three on Thursday to leave borrowing costs unchanged, with the dissenting trio pushing for a quarter-point increase to 4%.
The decision puts the Bank of England at odds with the Federal Reserve and the European Central Bank, both of which have tightened within the past week.
Despite holding, the central bank expects the situation to worsen before it improves.
Inflation “is likely to rise further over coming quarters,” the committee said, pointing to crude and refined energy prices that have climbed again since its last meeting and remain “more volatile and higher than pre-conflict.”
The case for holding rests on what has not yet happened.
“There has been little evidence so far of material second-round effects in price and wage-setting,” the statement read, meaning expensive energy is not yet feeding into broader wages and prices.
However, that reprieve may be temporary.
The risk of such effects “is greater the longer higher energy prices persist or are more volatile,” the committee warned, adding that risks to the inflation outlook are “tilted to the upside, and more so than at the time of the July Monetary Policy Report.”
Brent crude and UK wholesale gas prices have risen 36% and 78% respectively since July, with Brent at $106 a barrel and gas at 207 pence per therm on 14 September.
Refinery pressures have kept crack spreads, the gap between refined fuel prices and crude, well above pre-conflict levels.
Economic activity has held up slightly better than expected, while a soft labour market and the higher borrowing costs households and businesses have faced since the conflict began should bring inflation down over time.
The Fed raised its benchmark on Wednesday to a range of 3.75% to 4%, its first increase since 2023 and a unanimous decision, while signalling more to come.
The ECB lifted its deposit rate to 2.5% last week.
The sequence concludes on Friday with the Bank of Japan, where markets expect a hike.
That would leave the Bank of England as the only major central bank to have stood still this week, though on Thursday’s evidence not by much.
Additional sources • AP
A new burger joint in La Castellana, an affluent neighborhood in eastern Caracas. Photo: Santiago Bernal.
Any Venezuelan can tell you how unpredictable our country is. This uncertainty, almost idiosyncratic to Venezuela’s national identity, can be felt before you even arrive. You never really know what awaits you when visiting from abroad, no matter how many times you have made the trip before.
This trip, my first since Maduro was captured by US forces in January and less than two months after the deadly earthquakes that devastated parts of the country in June, was certainly unusual from the beginning.
I arrived in Valencia, a city with a small airport poorly equipped to handle the hundreds of passengers diverted from Maiquetía International Airport, the country’s largest. To reach my hometown of Mérida, I had to take a flight departing from another city, Maracay, because Valencia’s airport was too crowded with international flights to accommodate additional domestic routes. The flight departed not from a conventional commercial terminal, but from a small facility inside Venezuela’s largest Air Force base, surrounded by some of the Russian anti-aircraft equipment and fighter jets that had spectacularly failed to prevent Maduro’s extraction. The check-in process had to be done in a mall in the city, a few kilometers away from the base, to which we were transported in a small shuttle bus. The process was surprisingly efficient.
The road between El Vigía’s airport, which serves Mérida, and the city was in better condition than I expected, although the scars of decades of underinvestment remained clearly visible. In some places, sections of road that had collapsed in landslides more than two years ago were still buried under rubble.
I arrived in Caracas after a drive in a taxi equipped with a Starlink antenna, a gadget that until not too long ago could land you in prison.
As we approached Mérida, I spotted a car-carrying truck filled with brand-new Toyota models.
I could not remember the last time I had seen one of those while living in Venezuela. Maybe 15 years ago? In any case, what would be an unremarkable sight in most countries had become extremely rare in Mérida, a state whose economy depends heavily on its university and small-scale tourism, two sectors devastated by Venezuela’s decade-long economic crisis.
After arriving in Mérida, I realized that the car carrier was serving one of several car dealerships that seemed to have resurfaced across the city, all filled with new vehicles. They were also visible on the streets: hundreds of new Chinese models, alongside smaller numbers of Japanese, Korean, and American cars, were driving around Mérida for the first time I could recall in years.
This may sound banal or superficial, but Venezuela’s aging car fleet had long served as a stark reminder of the country’s economic demise. Between 2014 and 2018, car sales collapsed, reaching a historic low of just 2,000 vehicles sold nationwide in 2018. Seeing a model manufactured after the early 2010s outside Caracas had become highly unusual.
The situation has changed since 2025, when more than 38,000 cars were reportedly sold across the country. That remains a fraction of the more than 300,000 vehicles sold in pre-crisis 2007, at the height of Hugo Chávez’s oil boom, but it is enough to make a noticeable difference.
Mérida’s urban landscape has also been transformed by the hundreds of new stores that have opened across a city where economic stagnation and widespread power outages forced countless businesses to close over the past decade. The same phenomenon was evident in Caracas, where I arrived after yet another tour through Maracay’s Air Force base, and after a drive in a taxi equipped with a Starlink antenna, a gadget that until not too long ago could land you in prison and can now be purchased online through different national authorized distributors.
Beyond new cars, large sections of the city, including old Chacao in Caracas’s affluent east, appear to be undergoing an incipient but rapid process of gentrification, reminiscent in some ways of iconic European neighborhoods such as Gràcia in Barcelona, Ruzafa in Valencia (the Spanish one), or Shoreditch in London.
Chacao’s Bolívar Square is marked by a striking contrast. Its 18th-century church still bears large cracks caused by the earthquakes, while the surrounding streets are now filled with lively atmospheric restaurants and cafés that would not look out of place in Lisbon or Barcelona, and fitted with contactless payment systems charging prices that match those of many large European cities.
These businesses serve a small but very real segment of the Venezuelan population that can afford them. That group is not necessarily limited to enchufados.
This raises an obvious question: how can these businesses be profitable in a country where typical salaries remain around $220–280 a month, less than a tenth of the already meager average European salary, and where living what might be considered a relatively normal life has been estimated to cost around at least $800–1,000 a month per person?
The answer is that these businesses serve a small but very real segment of the Venezuelan population that can afford them. That group is not necessarily limited to enchufados, people who have enriched themselves through their connections to government corruption. Exact figures are difficult to establish, but managers in private companies can reportedly earn around $1,200 a month, while senior professionals in some sectors, including medicine, can make several thousand dollars a month in private practice, depending on their specialization.
The widespread adoption of Cashea, a fintech company offering consumers interest-free microcredit for everyday purchases, has also increased the purchasing power of a broader segment of the population. Cashea’s success is visible not only in Wall Street, but also in its extraordinary penetration of everyday commerce. Its recognizable yellow logo now signals that the service is accepted in businesses ranging from large clothing stores in shopping malls to small kiosks, and funerary homes.
You can even use Cashea to pay for a ride with Yummy, Venezuela’s equivalent of Uber.
These businesses still operate within a heavily dysfunctional financial system, distorted by an artificially low exchange rate and an economy constrained by high inflation and low productivity. Yet they serve a segment of the population that is slowly turning into a small, resurgent middle class. That group is helping drive growth in specific sectors, most notably real estate, which has reportedly expanded by around 30 percent in 2026.
This modest revitalization has coincided with an important reduction in street violence. Today, around 60 percent of Venezuelans report feeling safe walking at night, according to Gallup, something difficult to imagine only a few years ago. This is one factor helping explain the revival of nightlife in places such as Chacao, Caracas’ historical center and, to a lesser extent, parts of Mérida.
A similar transformation was evident in Margarita Island, a place I had not visited in almost two decades.
Most of these changes began before the US intervention in Venezuela. But they appear to have accelerated and spread in the months following Maduro’s capture.
Known as the “Pearl of the Caribbean,” Margarita’s tropical beaches, tax-free stores and fascinating history attracted large numbers of European and Latin American as well as Venezuelan tourists during the 1990s and early 2000s. Some of my own fondest childhood memories are, in fact, on the island.
That changed dramatically after 2014, as Venezuela’s political, economic, and public-service crises deepened, leaving the island in a state of abandonment.
Today, Margarita is experiencing a modest but noticeable revival in domestic and international tourism compared with the previous decade. This has been partly fueled by significant investment from domestic and international hotel chains, which now offer a wide range of accommodation, from relatively affordable all-inclusive packages to high-end luxury experiences.
After several years in which the island received mostly Russian and Polish tourists, Margarita is once again welcoming growing numbers of international visitors, particularly from Colombia, and Brazil. Many tourism operators are already looking forward to the possible return of American visitors in the short to medium term.
Less than 15 minutes from the mall in Pampatar, I also visited a community that has gone more than six months without running water.
People I spoke to said Margarita feels more alive and prosperous than it did between 2016 and 2019, the worst years of Venezuela’s crisis, even if the situation remains vastly different from the island’s golden age thirty years ago.
Cities such as Pampatar and Porlamar are experiencing a revival similar to what I saw in Mérida and Caracas, with new restaurants and stores filled with customers. In Pampatar, I visited what was probably one of the largest and most modern shopping malls I have ever seen, comparable to those in Miami or Madrid, filled with stores selling American and European brands whose prices I often found prohibitive even by European standards.
Most of these changes began before the US intervention in Venezuela. But they appear to have accelerated and spread in the months following Maduro’s capture, as the idea that something resembling a normal life might again be possible seems to be taking hold in some.
There is, however, a large elephant in the room. Improvements remain largely cosmetic and circumscribed to a small part of the population.
On the other side of the Avila, the mountain that separates Caracas’ gentrified neighborhoods from the Caribbean sea, over 12,000 people who lost their homes in the earthquakes wait for solutions in dozens of temporary camps erected among the ruins of their apartments.
But the limitations of this apparent resurgence are perhaps most obvious in the dismal state of public services. Hours-long power outages were common in Mérida and Caracas throughout my stay. Less than 15 minutes from the mall in Pampatar, I also visited a community that has gone more than six months without running water. Its residents make a living largely by collecting and selling salt from the island’s salt flats, with virtually no gear, or protection from the region’s unrelenting weather.
Businesses, hotels, and even many households have adapted to what are, in practice, nonexistent public services. Solar panels, batteries, and water tanks allow those who can afford them to maintain a large degree of independence from the State-provided services.
For most Venezuelans, however, these solutions remain unaffordable.
The same is true for healthcare and education. Both systems remain crippled by chronic underinvestment and neglect. The Venezuelan public health system remains severely understaffed and unable to provide adequate services to most of the population, while out-of-pocket health costs represent a large proportion of total health expenditure and less than 10% of the population can afford private insurance. In terms of education, despite a recent increase in school enrollment, the number of students has fallen by almost 2.8 million compared with figures reported in January 2024, as large numbers of high-school students continue to leave their studies to work.
Venezuela is far from fixed, and it will never truly be as long as chavismo remains in power. But it is certainly not the same country I left in 2019, nor the same country it was before January 3.
Many of the people I spoke to still want to leave, especially now that expectations of a quick transition to democracy have been tampered by the warm relationship of the Trump administration with Delcy Rodriguez. Others have decided that a somewhat normal life in Venezuela is once again possible and that, despite its uncertainties, it may be preferable to the immense challenge of migration in an increasingly hostile world.
Yes, these improvements are fragile, uncertain, and profoundly unequal. They exclude most of the country. But they are also an opportunity: Not only for some to live a relatively normal, easier life. But also a chance to build on whatever progress has been made and keep pushing towards the deep institutional and political reforms that only a democratically elected government can implement.
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Investors in Europe took the Federal Reserve rate hike in their stride.
Both the Euro Stoxx 50 and the broader pan-European Stoxx 600 traded over 0.6% higher at the start of Thursday’s session.
France’s CAC 40, Germany’s DAX 30, Italy’s FTSE MIB, Spain’s IBEX 35, the Netherlands’ AEX and Switzerland’s CH20, all traded between 0.2% and 0.7% higher than their Wednesday close.
The UK’s FTSE 100 led the pack and rose more than 1%.
Carmakers and industrials led the Paris index, with Renault gaining more than 2%, Stellantis 1.6% and Schneider Electric 1.3%. Technology went the other way, with Dassault Systèmes falling 2.4%.
The calm followed a rougher session in New York, where the Dow Jones Industrial Average closed 1.2% lower on Wednesday and the S&P 500 fell 0.4%, while the Nasdaq was broadly flat.
Asian markets were mixed overnight with Tokyo’s Nikkei 225 rising 0.2%, Seoul’s Kospi gaining 0.9%, while Hong Kong’s Hang Seng lost 0.7% and the Shanghai Composite 0.4%.
Reactions were “pretty much expected since the rate hike was also in line with market expectations”, said Lorraine Tan, director of equity research for Asia at Morningstar, adding that the Iran war is likely to keep pressure on inflation.
The more consequential moves were in currencies and bonds.
The US dollar climbed to its highest in seven weeks against a basket of major currencies, lifted by the jump in short-dated Treasury yields that followed the decision.
The euro was trading around $1.146, down 0.5% from Wednesday’s open.
A stronger US dollar makes European exports more competitive in American markets, but it also raises the cost of anything priced in dollars, which includes oil and gas, which compounds Europe’s energy bill at a difficult moment.
In bond markets, the two-year Treasury yield, the maturity most sensitive to rate expectations, jumped to around 4.72% from 4.67% before the decision, holding near that level on Thursday.
The 10-year sat close to 5%, reflecting both the war-driven energy shock and mounting investor concern about American government debt.
Traders now fully expect another rate hike by December and put the odds of a move as soon as October at around 50%. Goldman Sachs became one of the first major Wall Street banks to forecast consecutive hikes, reversing its previous view that this month’s move would be the only one.
Attention turns next to the Bank of England, which announces its decision later on Thursday and is expected to hold rates steady, and to the Bank of Japan on Friday, where a hike is anticipated.
Additional sources • AP
With SWIFT’s ISO 20022 compliance deadline looming in November, several banks are behind schedule.
This article appears in the September 2026 issue of Global Finance Magazine.
Cross-border payments are approaching a hard deadline in November, when SWIFT stops accepting unstructured address data under ISO 20022. The global messaging standard that replaced the old SWIFT MT format, ISO 20022 was designed to give every country’s banks a common baseline, and November’s structured-address requirement is the next phase of that migration.
SWIFT data from April showed that 61.2% of payments still carried unstructured debtor addresses, and 62.9% unstructured creditor data. This matters; once fully unstructured addresses are removed, noncompliant payments risk rejection or delay, with no fallback transition layer for missing address data.
A March survey of senior payments professionals across Europe and North America by RedCompass Labs found that 44% of banks were behind schedule on readiness for SWIFT’s removal of unstructured addresses. Pratiksha Pathak, RedCompass senior vice president and head of payments, attributed that figure to years of treating the wider ISO 20022 migration as a message-format exercise rather than the data quality overhaul it was always meant to be.
Anxiety about readiness was clear but uneven, with 20% of the very largest banks deeming the deadline “unrealistic,” compared with 5% of smaller banks, indicating that scale and legacy systems are part of the problem. This was not for lack of trying; most banks are spending around $20 million on the requirements, with larger institutions spending over $30 million.
Bank readiness has shifted since March, Pathak noted. Some trailblazers have rolled out “brilliant” programs, she said, while laggards still hope SWIFT will push back the clock. That won’t happen, Pathak said: “They’re not moving the deadline.”
Lloyds is among the banks that recognized the central issue early, building its solutions around structured data from the outset. API-based channels natively support the required fields, backed by validation controls and proactive client outreach, including a ramp-up in dedicated resources as November approaches.
“The biggest challenge isn’t usually the payment message itself,” said Surath Sengupta, head of transaction banking products at Lloyds. “It’s the readiness of the underlying data. Many organizations already hold most of the required information, but it’s often stored inconsistently across ERP and treasury systems.”
Early movers aren’t aiming just to meet the deadline, he said. They are positioning themselves to capture the broader gains from automation that follow, “from increasing automation and reducing friction to laying the foundations for the next generation of cross-border payments.”
Industry estimates suggest that 5% to 10% of payments currently generate sanctions screening alerts requiring manual review, a friction that richer structured data should directly ease.
Not every treasurer is equally confident in the guidance they receive, however. Some have faced practical challenges with the availability of detailed technical specifications and implementation guidance from banking partners, said Marianna Polykrati, group treasurer at aquaculture producer Avramar: “Many corporates are still waiting for this information.”
Ownership of payment process and master data varies across organizations. At Avramar, treasury and accounts payable share the responsibility, making close collaboration essential.
“Our preparation goes well beyond generating ISO 20022 XML files,” said Polykrati. “We see this as a data quality and process transformation project. As we prepare for an ERP migration by the end of the year, we are using this opportunity to clean up master data, standardize payment workflows, and strengthen governance. Rather than treating ISO 20022 and the ERP implementation as separate initiatives, we see them as complementary projects.”
While compliance may be the starting point, “operational improvement is where the real value is created,” she said, echoing Pathak and Sengupta’s views. With just two months to go, the real test may not be whether the deadline holds, but how many organizations have treated it as an opportunity for long-term gains rather than a burdensome medium-term obligation.
Deborah Ritchie is a contributing writer based in the U.K.
Crypto traders are assigning Anthropic an implied valuation more than $1 trillion (€866bn) above its last funding-round price, before public investors have even seen its accounts.
The company behind Claude has filed its IPO paperwork confidentially and chosen Nasdaq for its initial public offering.
What remains is the public release of its S-1 filing, the official registration package that a US company submits to the Securities and Exchange Commission.
Until it arrives, the only live price on Anthropic comes from a corner of the crypto market where pre-IPO speculation runs rampant, and it currently sits far above anything the company has ever agreed with an investor.
The last agreed valuation was $965 billion (€836bn), set when a $65 billion (€56bn) Series H round closed at the end of May, led by Altimeter Capital, Dragoneer, Greenoaks and Sequoia.
That was already an extraordinary figure for a company founded in 2021 by Dario and Daniela Amodei, and it followed a valuation of $61.5 billion (€53.3bn) barely a year earlier, representing a nearly sixteenfold increase in roughly 12 months.
Revenue has moved almost as fast.
Anthropic’s annualised revenue run rate passed $65 billion (€56bn) by the end of July, driven by enterprise adoption of Claude.
The losses are also enormous, reportedly reaching close to $42 billion (€36.4bn) in 2025, reflecting the cost of training frontier models. Amazon has committed to investing as much as $33 billion (€28.6bn) in the company, while Anthropic has committed to spending more than $100 billion (€86.6bn) on AWS technologies over the coming decade.
Given these figures, investors are already aiming considerably higher than the valuation in the last round.
Reports have put the target IPO valuation at $2 trillion (€1.73tn), with Goldman Sachs, JPMorgan and Morgan Stanley leading an offering expected to raise more than $60 billion (€52bn).
Perpetual futures contracts tracking Anthropic’s pre-IPO valuation are currently trading on Hyperliquid, the largest decentralised derivatives venue, where the implied market capitalisation reached an all-time high of roughly $2.36 trillion (€2.05tn) and sits near $2.15 trillion (€1.86tn) at the time of writing.
That is about 2.2 times the Series H valuation.
Heng Yu Lee, partner at market maker DWF Labs, which is active in these instruments, rejects the suggestion that leverage rather than conviction is driving the premium.
“Whether it’s leveraged or not, everyone trading the pre-IPO market is genuine demand at the price that’s reflected,” he told Euronews, adding that “the premium is pricing in public information that’s available, such as expected revenue numbers and expected market demand for the stock.”
These contracts will also be the first instruments to react when the filing lands, trading around the clock while equity markets are shut.
“At a moment like the S-1 dropping, you typically see volume spike and prices fluctuate heavily as the market digests the information,” Lee explained.
However, the market remains small relative to what it is valuing.
“Currently, the market isn’t super deep, with just $6M in 24-hour volume and $31M in open interest on Hyperliquid,” Lee said, adding that liquidity should improve as the listing approaches, given that more investors are likely to pile in.
Lee is also candid about how much weight the number deserves.
“As of now, I wouldn’t rely too heavily on the absolute pricing as we have yet to have a public S-1,” he stated while clarifying that “the direction of how the prices move typically still accurately reflects the shifting sentiment towards the company as things develop.”
Once Anthropic files publicly, it will cement 2026 as the year of AI IPOs.
It started with chipmaker Cerebras Systems, which designs wafer-scale processors pitched as an alternative to Nvidia’s. The firm listed on Nasdaq in May after two false starts, raising $5.55 billion (€4.76bn) at $185 a share, above its revised price range.
The stock opened 89% higher and closed its first day near $311, valuing the company at roughly $67 billion (€58bn) compared with the $23 billion (€20bn) it had been worth three months earlier.
Investor appetite for a credible Nvidia challenger proved fierce, though the enthusiasm cooled quickly after a disappointing first earnings report. Cerebras is currently trading at a valuation of around $43.7 billion (€37.8bn).
Then came SpaceX, which listed in June, raising more than $85 billion (€73.6bn) at a valuation that briefly touched $2.8 trillion (€2.4tn) before falling back to around $1.95 trillion (€1.69tn).
OpenAI was also slated to hold an IPO this year and had already filed confidentially, but has now stepped back entirely. The company has a private valuation of $852 billion (€738bn), set during a $122 billion (€105bn) round in March.
CEO Sam Altman told Fortune on Saturday that listing this year would be “ill-advised”, ruling out 2026 and declining to commit to 2027. He said the company had “a lot of stuff to do” on safety and alignment and that being private made that easier.
Altman’s comments arrived the same day that Anthropic CEO Dario Amodei published an essay titled “We Must Pace the Frontier”, arguing that AI companies should deliberately slow the rate at which they improve their most capable models.
Amodei proposed three steps: independent evaluators with employee-level access to frontier systems, coordination on safety standards among labs in democratic countries, and international agreements on the most dangerous categories of use.
Anthropic has already committed unilaterally to the first, and the endorsements came quickly, with Sam Altman saying he agreed on the need to pace the frontier and Elon Musk replying simply: “Dario is right”.
However, US President Donald Trump did not.
In his first public response to the three CEOs, Trump, speaking in Ireland on Sunday, dismissed the argument.
“We’re leading China in AI. We’re the most sophisticated country in the world, and frankly, I want to keep it that way, because whoever wins AI wins,” Trump said, describing some warnings as things “that won’t happen”.
Trump has since reiterated that argument in several social media posts.
Likewise, China’s foreign ministry called the warnings “fearmongering”.
Markets registered the exchange, with shares in SoftBank, Kioxia and SK Hynix falling sharply on Monday. Shares in the Japanese and South Korean companies fell more than 6% and 4.3%, respectively.
This leaves Anthropic in an awkward position as it approaches what could be the largest listing ever attempted in public markets.
The company is asking public investors to fund frontier AI development while its founder argues publicly that such development should proceed more slowly.
That is not necessarily a contradiction, since pacing is not stopping, and Anthropic has always argued that safety-focused labs should be at the frontier rather than ceding it.
However, it is a story the S-1 filing will have to tell convincingly, and the risk factors section will be read unusually closely.
WASHINGTON, United States: The US military honor guard has been rehearsing and the new White House helipad is ready. But will Xi Jinping and Donald Trump achieve lift-off at their summit next week?
Warnings of an AI apocalypse hang heavy over the Chinese president’s first talks at the White House with his US counterpart, with both countries racing for supremacy in this technology.
Trump’s Iran war casts a long shadow too, as China seeks to avoid US sanctions against countries dealing with Tehran, despite reports that Beijing supplied Tehran with intelligence for a strike on US troops.
A trade war is of even greater concern and the world’s two largest economies are still seeking to mitigate the fallout from Trump’s global tariffs. The threat of war over Taiwan looms large as well.
Behind it all is desire to manage tensions between a superpower keen to keep its place at the top and a rapidly rising rival determined to make the 21st century a Chinese one.
“I’ll be discussing almost everything with him,” Trump told reporters aboard Air Force One on Sunday, ahead of their meeting on September 24.
‘Don’t expect much’
But the two leaders are more likely to simply extend a relative truce rather than produce any concrete results, like when Xi hosted Trump in Beijing four months ago, experts said.
“I don’t expect much to come out of this,” Jonathan Czin of the Brookings Institution told AFP.
“In many ways, this is going to be a recapitulation of Trump’s visit to Beijing back in May, where the focus was really on the ostensible rapport between the two leaders.”
With fears about AI making global headlines, agreement to cooperate on regulation or a slowdown is expected to be a major topic of discussion between Trump and Xi.
But any major deals are “politically out of reach for now,” said Wang Dong, a professor at Peking University, as Beijing and Washington both fear losing out in the race for AI dominance.
Tensions over Iran will also come up. US Treasury Secretary Scott Bessent is due to meet his Chinese counterpart He Lifeng this weekend for pre-summit talks including on Iran sanctions.
Trump has, however, played down reports that Chinese entities supplied Iran with satellite imagery for an attack on a US military base in Jordan, saying Xi had “behaved reasonably well” and that “we spy on them, too.”
On trade, there is “room for progress on tariffs, agricultural purchases and selected export controls,” Yue Su of The Economist Intelligence Unit told AFP.
‘Spectacle’
Yet Trump has, as so often before, appeared more interested in the optics of his meeting with a powerful foreign leader than with the substance.
“This is less a summit and more a spectacle. This is designed for deep public consumption,” said Kurt Campbell, former US Deputy Secretary of State and now Chairman of The Asia Group.
Trump pushed for a new granite helicopter landing pad on the White House South Lawn to be open in time for Xi’s visit, which will include a grand state dinner.
Troops in flashy uniforms have been rehearsing on the White House driveway this week ahead of the welcome ceremony.
Trump’s only disappointment is that his under-construction $400 million ballroom won’t be ready — though he has said that when finished it will “top” Beijing’s Great Hall of the People, where Xi hosted him in May.
During the Beijing trip Trump showered praise on Xi, only for the Chinese leader to warn about possible “conflict” over Taiwan.
Fears of a possible Chinese invasion of the self-governing island and global semiconductor hub — which Beijing claims as its territory — remain the most sensitive topic between Washington and Beijing, said Peking University’s Wang.
One possible concrete deliverable is an announcement of further summits.
Trump and Xi are expected to meet in November at the Asia-Pacific Economic Cooperation (APEC) forum in Shenzen, China. The Kremlin has suggested a three-way meeting with Russian President Vladimir Putin.
Trump is meanwhile expected to invite Xi to the G20 summit in December at his Doral resort in Miami.
MADRID: Raphinha scored a hat trick as Barcelona earned yet another big win on Wednesday, routing Racing Santander 7-2 for its best-ever start to a season.
The Catalan club had never won seven games in a row. It has won six straight in the league and another in the Champions League.
Gabriel Jesus and Lamine Yamal also found the net for Barcelona, which has scored at least five goals in five of its seven matches across all competitions this season.
In the English League Cup, Manchester United was stunned 3-2 by Brighton after squandering a two-goal lead to crash out in round three.
In the Europa League, Benfica beat AC Milan 2-0 on the road in the first round of the league stage.
Barcelona and Raphinha stay red-hot in Spain
With his hat trick, Raphinha took his league-leading tally to nine goals in six matches. The Brazil forward has scored a goal in all but one game this season.
“Happy for the goals and for the victory, which is the most important thing,” Raphinha said. “The players have the hunger to always want more. It’s a mentality to always try to score more goals and to create more scoring opportunities.”
João Cancelo also scored for Barcelona, which was helped by an own-goal from Racing’s Asier Villalibre. Maguette Gueye and Yassir Zabiri scored for the visitors.
Barcelona has only failed to score fewer than four goals this season in a 2-0 win against Athletic Bilbao.
Barcelona had previously won six games in a row to start the season — in 1929-30, 1960-61 and 2018-19, the club said.
Yamal had a goal disallowed for offside, missed a penalty and hit the post before finally scoring late for Barcelona.
The La Liga champion has also crushed Elche, Rayo Vallecano and Valencia in the league, and Feyenoord in the Champions League.
Hansi Flick’s team has outscored opponents 33-7 in seven games across all competitions. Barcelona has a three-point league lead over Real Madrid, which won at Elche on Tuesday.
Barcelona goalkeeper Joan García was replaced by Wojciech Szczesny at halftime because of an apparent injury. Szczesny’s blunder led to a Racing goal after the goalkeeper tried to control the ball inside the area and was robbed in front of the net.
Atletico Madrid routed visiting Osasuna 4-0 with goals by Jonathan David, Lee Kang-In, Robin Le Normand and Álex Baena.
It was the second win in a row for Diego Simeone’s team, which moved to third. Osasuna has lost three in a row.
Sevilla jumped to fourth by winning 1-0 at Deportivo La Coruña with a second-half goal by Miguel Sierra. Sevilla has won two in a row. Deportivo stayed seventh.
The game between Levante and Athletic Bilbao was postponed because of heavy rain in the city of Valencia.
United upset by Brighton rally in League Cup
Manchester United was booed at Old Trafford after it fell to a third defeat of the season, and second in as many games following Sunday’s loss to Manchester City.
“We had the game exactly where we wanted it and let it get away from us in a big way,” United coach Michael Carrick told Sky Sports. “We can’t accept that as a group. I take responsibility for it.”
United led 2-0 after 10 minutes through goals from Shea Lacey and Mason Mount. But Brighton rallied with Charalampos Kostoulas pulling one back before halftime, and Pascal Gross and Maxim De Cuyper secured victory after the break.
Defeat means United has suffered elimination from the League Cup at the earliest stage for the second season in a row after being knocked out by fourth-tier Grimsby last year.
Benfica tops Milan as Europa League kicks off
Benfica beat AC Milan in the highlight match in the Europa League.
Dodi Lukébakio and Jakub Kaminski scored a goal in each half for the Portuguese club.
Sparta Prague won 4-1 at Ararat-Armenia for the round’s biggest victory.
Sunderland beat visiting AZ Alkmaar 1-0 in its first European match in more than seven decades. Lyon won 2-1 at Anderlecht, while Bayer Leverkusen defeated visiting Celje 2-0.
Celta Vigo’s winless start to the season reached seven matches after a 1-0 loss at Omonia.
JERUSALEM: Prime Minister Benjamin Netanyahu vowed on Wednesday to pass a law to revoke the citizenship of anyone who defames Israel’s soldiers, his latest threat against the Israeli directors of “NAZA,” a documentary about soldiers’ killing of Gaza civilians.
Directed by Israeli journalists Yuval Abraham and Rachel Szor, NAZA alleges that mass civilian deaths were routinely built into Israeli targeting decisions in Gaza, something Netanyahu and the military reject.
The film, which won a major prize at the Venice Film Festival on Saturday, takes its title from an Israeli military term for expected “collateral casualties” and is built around anonymous interviews with intelligence officers and soldiers.
It has drawn a backlash in Israel, with the military examining potential legal action against those involved in it. But it has also played into the charged political atmosphere ahead of Israel’s October 27 election, which public opinion polls show Netanyahu’s right-wing coalition could lose.
On Tuesday, Netanyahu accused some of his election rivals of failing to take a tough stand against the documentary, saying this made them unfit for office. And on Wednesday, he pledged to advance two bills that he said aimed at addressing the “immense damage” done to Israeli soldiers.
“The first, to revoke the citizenship of anyone who defames (Israeli) soldiers, and the second to hit them in their pockets and increase the statutory damages for defamation they can be sued for by 20 times,” Netanyahu said in a social media video.
“We will hit them both in their pockets and in their citizenship, as their place is not with us.”
Netanyahu cited three incidents in proposing the bills: “the recent film NAZA which portrayed (Israeli) officers and soldiers as war criminals“; 2025 remarks by left-wing ex-general turned politician Yair Golan that “a sane country does not kill children as a hobby“; and a military legal officer’s 2024 leak of a video showing soldiers abusing a Gaza detainee.
Reuters could not immediately reach the NAZA filmmakers for comment.
In 2022, Israel’s Supreme Court upheld a law that permits stripping citizenship from Israelis who carry out actions that constitute a breach of trust against the state. Any new legislation would likely face similar court challenges.
The NAZA filmmakers say they believe it is important that Israelis watch the documentary and grapple with the narrative it presents.
Gaza health authorities say more than 73,000 Palestinians, most of them civilians, have been killed in Israel’s military campaign that has left much of Gaza in ruins.
The war was triggered by Hamas’ October 7, 2023, attack on Israel which killed 1,200 people, most of them civilians, according to Israeli tallies.
WASHINGTON, United States: The US Federal Reserve on Wednesday raised interest rates for the first time since 2023, defying President Donald Trump’s demand for cuts, as central bank chief Kevin Warsh stressed the need to combat inflation that has been “too high” for “too long.”
The Fed’s Federal Open Market Committee voted unanimously to raise rates by 25 basis points to between 3.75 and 4.00 percent, saying the rate hike would support a “timelier return” to its two-percent target for inflation.
Warsh, appointed by Trump, said the decision was a “serious” one, but needed to be taken.
“The plain fact is that inflation is too high, and has been for too long,” he told a press conference.
And Wednesday’s rate hike may not be the last — the vast majority of Fed policymakers indicated that at least one more rate hike was likely necessary before the end of the year, according to their Summary of Economic Projections.
US households and businesses have been battered by years of higher-than-target inflation, and prices have surged in the wake of Trump’s war on Iran, his signature tariff policies and the ongoing AI boom.
Trump has launched an unprecedented assault on the Fed’s independence since taking office, attempting to fire a Fed Governor and launching a criminal probe against Warsh’s predecessor in his quest for lower rates to spur economic activity.
The president’s Republican Party faces a stern test in upcoming midterm elections, with rival Democrats seeking to wrest control of both houses of Congress and economic issues front-and-center for voters.
Growing calls for hike
The Fed has held rates steady since January, choosing to wait to gauge the effects of the Iran war’s energy price shocks and to let the impact of tariffs on prices ripple through the economy.
Since July, however, a growing faction of policymakers had indicated a rate hike may be required to tame inflation, as the war grinds on and prices remained elevated.
On Friday, August’s consumer price index came in at 3.4 percent — unchanged from the month before, but still well above the Fed’s long-term two-percent target.
In its SEP, the Fed raised its forecast for its preferred gauge of inflation — the Personal Consumption Expenditures (PCE) price index — by 0.1 percentage points to 3.7 percent by year-end.
The Fed also raised its projection for GDP growth by year-end to 2.3 percent, up 0.1 percentage points.
‘Rather unfortunate’
US stock markets largely priced in Wednesday’s rate hike, but they were still down on the news — expected with any rate hike as equities become less attractive.
Yields on 10-year US Treasury bonds — which have surged in recent days as uncertainty on long-term inflation has spiked — were also up past the five-percent threshold.
Following the Fed’s announcement, White House spokesperson Kush Desai said the decision was “rather unfortunate” and that Trump had been clear that he wanted lower interest rates.
Warsh was named to his position after a contentious Senate confirmation process, where Democratic lawmakers accused him of being a “sock puppet” for Trump, which he denied.
So far, Trump has supported Warsh, claiming that the Fed chair wants lower rates and accusing the board of being “political.”
The Fed has a dual mandate to deliver maximum employment while keeping inflation to its long-term two-percent target.
It mainly achieves these goals by setting the key US interest rate — lower rates tend to spur economic activity but fuel inflation, and hiking them cools both activity and prices.
The Fed’s SEP showed that at least 12 of 18 policymakers who participated in the projection expected one more rate hike would be required before the end of the year.
Four policymakers expect two more rate hikes to be required.
Warsh has criticized the Fed’s policy of offering such projections in the past and did not participate in the previous iteration in June.
This projection also included only 18 policymakers, suggesting he had once again withheld his contribution.
Home 
Private Credit Fed Rate Hike Squeezes an Already Stressed Private Credit Sector
Fed rate hikes threaten to further strain direct lenders as private credit default rates hit record highs.
The private credit industry keeps insisting it’s fine. The data keeps suggesting otherwise, and Wednesday’s interest rate hike from the Federal Reserve isn’t going to help the argument.
The Federal Open Market Committee officially raised the federal funds target range by 25 basis points to 3.75%-4.00%. The decision, which was unanimous among the 12 board members, marks the first rate hike since 2023.
“Whenever the Fed increases rates, the pressure on the liability side becomes very high,” David Yahalomi, chief operating officer and co-founder of Tel Aviv-based loan-management platform Hypercore, said in an email.
Companies that borrow through direct lending typically carry floating-rate debt, meaning their interest costs rise automatically whenever the U.S. central bank moves rates. The hike officially pushes up borrowing expenses at a moment when defaults are already climbing to levels not seen before.
“In the event of a prime rate increase, this structure shrinks [private credit portfolio company] margins,” Yahalomi added. And the squeeze is already showing up in the numbers.
A Fitch Ratings report from Monday shows that the U.S. Private Credit Default Rate, or PCDR, hit 6.3% for the 12 months ended in August. That’s up from 6.1% in July. The rate has now held at or above 6.0% since April. Here’s the credit rating agency’s breakdown of the findings:
While the overall PCDR blends middle-market CLO ratings (MCO) and insurer-monitored private ratings (PMR), August’s rise was driven by record stress in MCOs (5.6%), even as PMR rates eased slightly to an elevated 8.5%.
Harvey Tian, head of loan operations at Suntera Fund Services, said a size-weighted view changes how PIK interest should be read as well.
“Once the prime rate goes up, the terms on all the rates will increase, and it will definitely put pressure on the borrower side — the ones paying cash interest,” Tian told Global Finance on a call.
Loans structured with PIK options, however, aren’t paying cash interest at all, he noted. That insulates that particular pool of borrowers from a higher interest rate.
“I don’t see a huge effect on the underlying portfolio of PIK borrowers if it’s a one-time hike,” Tian said of Wednesday’s Fed announcement. A quarter-point increase would phase into the PIK rate structure over time rather than land all at once.
Multiple hikes are a different story, given the inflationary pressures caused by a worsening U.S.-Iran conflict.
Anthony Noto covers corporate finance and private credit. Contact him at anoto@gfmag.com.
Kevin Warsh has broken away from US President Donald Trump in his first Fed move, and he has done it with the entire committee behind him.
The Federal Open Market Committee lifted rates on Wednesday after holding them at 3.5% to 3.75% since December, ending a pause that had grown harder to justify as energy costs pushed prices higher.
Not a single member dissented in a unanimous 12-0 vote.
That matters because the pressure ran in both directions as three regional presidents had voted for a hike in July, while the White House spent months demanding cuts.
Nobody voted for either extreme.
At the time of writing, the market reaction to the decision has been fairly muted likely due to the fact that the hike was widely expected.
The Fed’s communication was as striking as its decision.
The statement ran to three short paragraphs, a fraction of the length markets are used to, with no forward guidance and no hedging.
“Inflation remains elevated,” it read, adding that “today’s policy action will support a timelier return to the Committee’s 2 percent goal.”
The word “timelier” carries an implicit admission that the return had been too slow.
Then a sentence the Fed almost never writes: “The Committee will deliver price stability.” Not seeks to, not is committed to. Will.
The economic assessment was also confident throughout.
Activity is “expanding at a solid pace”, domestic spending “has been resilient”, productivity growth is “strong” and capital investment “robust”, while job gains “have kept pace with the workforce”.
Uncertainty remains elevated, the Fed said, owing partly to “geopolitical developments”, its formulation for the Iran war.
By describing an economy in good health, the committee removed the argument that higher rates would damage growth, which is precisely the case US President Donald Trump has been making.
The decision had been building for months.
Three regional Fed presidents dissented in July in favour of an increase, the most in one direction since 2016, and several others said afterwards they were ready to move unless inflation eased which it did not.
The Fed’s preferred gauge, the personal consumption expenditures index, ran at 3.7% in both June and July, with core inflation at 3.3%. Before the Iran war sent fuel prices climbing, core stood at 3%.
Consumer prices held at 3.4% in August, but the monthly increase of 0.4% was the sharpest since May, evidence the energy shock is feeding through. Inflation has now been above the 2% target for more than five years.
Warsh had effectively committed himself at Jackson Hole in August, telling the symposium he “would be hard pressed to describe broad financial conditions as restrictive” and warning that unless underlying inflation moved to target “clearly and at sufficient speed”, the Fed had “work to do”.
Markets took him at his word as the CME’s FedWatch tool put the probability of a rate hike above 90% before today’s decision.
US President Donald Trump had spent months demanding the opposite, insisting the country should have the lowest interest rates in the world and choosing Warsh partly on the expectation he would deliver them.
Warsh himself said while campaigning for the job that rates could come down.
The treatment of his predecessor sharpened the stakes as Jerome Powell was publicly attacked for moving too slowly, and the US Justice Department opened a criminal investigation into testimony he gave to Congress.
Today’s decision could also have a restoring effect on the perceived independence of the Federal Reserve as an institution.
The technical details point to a Fed settling in at the new level.
The interest rate on reserve balances rises to 3.90% from Thursday, the primary credit rate to 4%, and standing repurchase operations will run at 4%. Seven regional reserve banks requested the discount rate increase.
The Fed’s new dot plot shows 12 of 18 officials expect another 0.25% hike by year-end, taking rates to 4.125%, while four see rates reaching 4.375%.
The hawkish signal extends well beyond 2026 as 14 officials see rates ending 2027 above today’s level, while the 2028 median stands at 3.9% versus 3.4% expected.
The longer-run rate also rose to 3.2%, suggesting officials increasingly believe neutral rates have moved higher while economists also expect more to follow.
SILVERSTONE, England: Max Verstappen needed about 35 minutes to overcome 100 karting drivers in a Red Bull event at Silverstone on Wednesday.
Verstappen started 101st at the Silverstone karting circuit, and overtook 64 drivers on the first lap alone, with many of his opponents crashing among themselves.
Many got blocked on the track after a pile-up that prompted a full-course yellow flag. Verstappen went off track but was able to return.
“That was simply lovely,” Verstappen said. “It was a lot of fun.”
Verstappen, who finished second in Formula 1’s Spanish Grand Prix on Sunday, was up to 37th after the first lap, and up to sixth place by the sixth lap.
He went off track again but stayed comfortably faster than most drivers, none of them with any significant professional driving experience.
He said jokingly that the victory ranked as “the best one yet” in his career.
JEDDAH: Around 150 senior business leaders, investors and policymakers will gather in Riyadh on Sept. 29 to examine the forces expected to shape Saudi Arabia and wider MENAT economies over the next five years.
Forum to examine five-year economic outlook
The inaugural Economic Forum by Servcorp, powered by Emerging Markets Intelligence & Research, or EMIR, will examine the broader forces shaping the Kingdom and the wider Middle East, North Africa, and Turkiye, or MENAT, according to a press release.
As Saudi Arabia continues to advance its Vision 2030 agenda, the forum will use the Kingdom as its base while adopting a broader MENAT perspective.
Its five-year outlook will focus on the longer-term forces shaping business and policy decisions, drawing on Servcorp’s regional experience and EMIR’s economic intelligence to connect global developments with the practical realities of operating across MENAT.
Leaders to discuss regional growth and business priorities
“After more than 25 years supporting businesses in the region, we know that ambition creates value only when it is translated into execution,” CEO, Middle East, Europe, and America at Servcorp, David Godchaux, said.
Godchaux added that leaders must decide where to commit, which capabilities to build and which priorities to defer, yet the context for making those decisions is becoming more complex.
He added that the Economic Forum by Servcorp would provide a setting for candid, peer-level discussions on the decisions that will shape the region’s next phase of growth.
“The Economic Forum by Servcorp will provide a setting for candid, peer-level discussions on the decisions that will shape the region’s next phase of growth,” he said.