[JumpCrisscross]

> what will break the clock ?

So unlike money-market funds, these private-credit funds can gate withdrawals and extend and pretend by turning cash coupons into PIKs. So I don't actually see credit concerns directly driving liquidity issues for the banks that didn't hold the risk on their balance sheet glares Germanically.

Instead, I think the contagion risk is psychological. Which is an unsatisfying answer. But if there are massive losses on e.g. DBIP and DB USA halts withdrawals, then the 2% stock loss Morgan Stanley suffered when it capped withdrawals [1] could become a bigger issue.

[1] https://www.wsj.com/livecoverage/stock-market-today-dow-sp-5...

[boringg]

I believe the gated feature can be waived though it causes a precarious situation. It ends up with same psychology of a bank run -- people (institutions) concerned because they can't access funds or they think that the queue to exit a failing fund is too long - filled each quarter (i.e. by the time they redeem NAV has collapsed).

[JumpCrisscross]

> the gated feature can be waived

Or never invoked. It's a safety feature for the fund and, arguably, systemic stability.

[boringg]

Totally - its supposed to prevent a collapse of confidence but at the same time can signal a collapse of confidence. Double edged sword.

[epsteingpt]

You can't gate redemptions forever amigo.

People eventually want to spend their money.