Goeasy shares plunge 50% amid rising defaults and credit market turmoil
Shares of Canadian lender Goeasy, which provides loans to borrowers with low credit scores, dropped by 50% following forecasts of increased loan defaults and debt write-offs. This highlights mounting issues in the problematic loans market, with credit funds currently valued roughly 20% below the stated portfolio values. The situation mirrors a real-time financial crisis reminiscent of 2007, when fund freezes preceded large bankruptcies such as Bear Stearns and BNP Paribas.
Key developments include BlackRock restricting withdrawals from its $26 billion HPS Corporate Lending Fund. Investors requested redemption of 9.3% of shares ($1.2 billion) but received only $620 million. BlackRock’s credit exposure to Renovo Home Partners fell from $25 million to zero, with Renovo's shares dropping 7%, while other major players including KKR, Apollo, Ares, and Blue Owl lost 5–6% of their value. Cliffwater, the largest credit-focused fund with $33 billion in assets, reported three consecutive losing months.
This credit market distress is also impacting banks: last year's bankruptcies of Tricolor and First Brands negatively affected JPMorgan, UBS, and Jefferies, further straining their asset quality and contributing to instability in the financial sector.
