Lisa Lee

The recent bankruptcies of a little-known auto-parts supplier called First Brands and auto lender Tricolorhas sparked talk about a looming financial crisis in a booming but much misunderstoodcorner of finance. Jamie Dimon, the CEO of JP Morgan, sent shivers through financial markets earlier this month when he referred to these bankruptcies as a ‘cockroach’ and warned: ‘When you see one cockroach, there are probably more.’ His comments were taken as a broadside against private credit, a niche corner of debt markets that has seen blazing growth in recent years. In private credit, non-bank financial firms such as Apollo Global Management, Blackstone and KKR pool capital from investors to lend out to corporations, and, increasingly, to other sections of the economy.

An American in London, I frequently have occasion to return to my hometown of Los Angeles. In my latest trip this week, I changed my drink of choice because of President Trump. I passed over a French champagne in favour of a California red, and, in effect, became a case study on the transformative might of Trump’s policies. When I dumbfoundedly showed my US-based drinking mates the bar menu, they too marvelled at the exorbitant prices Fortune found me settling into a bar in Beverly Hills, in a swanky five-star hotel in one of the country’s poshest neighbourhoods, for a nip of drinks with former colleagues. Thinking to celebrate our reunion in sunny Los Angeles with champagne, I looked at the menu – and was shocked.