Intrigue Insight – Iran war, day 39

• Hours before President Trump’s latest reopen-Hormuz-or-get-bombed-harder ultimatum expires at 8pm ET tonight (Tues), Iran’s regime has conveyed its own 10-point-plan back to DC via Pakistani intermediaries, including…

  • i) No future attacks

  • ii) Permanent end to this war

  • iii) End to the Israel-Hezbollah war

  • iv) End to all related regional conflicts with Iranian proxies

  • v) Lifting all US and international sanctions on Iran

  • vi) Reconstruction support

  • vii) Reopen the Strait of Hormuz

  • viii) A new $2M fee per vessel via Hormuz (earmarked for reconstruction)

  • ix) Iran to split that fee with Oman, and

  • x) A new formal protocol for safe passage via Hormuz

• Trump has suggested it’s a “significant step but not good enough”, flagging this latest wartime deadline (his ~fifth by our count) is final.

• Meanwhile, Iran has hit a major petrochemical complex in Saudi Arabia’s city of Jubail, while Israel has claimed hits on a petrochemical plant in Iran, and is warning Iranians not to travel by train.

• Comment: This latest 10-point-plan is Iran’s biggest concession to date (re-opening Hormuz), though it’ll be tough for Trump to swallow given its ~silence on nukes, missiles, and proxies, not to mention the idea of endorsing a new Hormuz arrangement that could line the regime’s pockets with ~$50B in annual transit fees — that’d expand the regime’s entire budget by 50%! But even as a deal *potentially* inches closer (with VP Vance reportedly pushing for an offramp), oil has edged back above $115 a barrel — it’s a reminder that, with a chunk of the region’s energy assets now in pieces, no single tweet or even peace pact can untangle the supply mess ahead.

Saving Private Ryan Credit

"When you see one cockroach, there's probably more." Remember who said that?

Long-time Intriguers will recall it was JP Morgan's billionaire boss, Jamie Dimon, referring to some of the jitters around private credit late last year. And… maybe it's just the cat, but we're hearing some scratching and scurrying sounds under the couch again.

What's going on?

Recall after the 2008 crisis, banks tightened their lending, meaning rivers of cash instead flowed into the high-yield, high-risk, and low-regulation world of direct lending — that's companies quietly negotiating loans directly between themselves, rather than from a bank.

This private credit has theoretically been a win-win: lenders earn higher interest, and in return, borrowers get more loan speed, certainty, and flexibility.

But we say 'theoretically' because several of the big-name funds in private credit are now facing redemption waves — too many investors suddenly saying they want their money back, forcing delays and/or denials from Wall Street desks like…

• A $26B BlackRock fund

• An $8B Morgan Stanley fund

• A $25B Apollo fund, and

• An $11B Ares fund.

Plus news broke over the Easter weekend that a $5B fund out of Barings just joined this redemption cap list, curbing withdrawals at 5% after investors tried to yoink 11%. So… what's going on?

There are three main theories.

The first (promoted by private credit folks) is this is all working exactly as intended: these 5% quarterly redemption gates are a feature, not a bug. The whole idea is to give investors some liquidity in case they need a bit of cash, while protecting the longer-term health of the fund and the remaining shareholders. Otherwise, funds have to fire-sell loans to return cash to investors, delivering unnecessarily crappy returns to everyone.

Under this theory, jittery investors are trying to pull up the drawbridge in our wild world, but it's got nothing to do with the actual health of these funds or their underlying loans.

A second theory is it's part of the ongoing SaaSpocalypse (we prefer 'SaaSacre'). With new AI tools now enabling tech-illiterate randoms to casually recreate entire multi-billion-dollar software-as-a-service (SaaS) giants, markets are scanning for any exposure to (say) a resulting collapse in tech revenues and/or spike in defaults. And can you guess who's been writing big loans to Silicon Valley lately? Yes! Private credit funds.

The most spectacular example has been Blue Owl, with investors trying to yank 22% out of its flagship $36B fund, and 41% out of its more tech-focused fund. But those other big-name funds above are also exposed, with tech firms featuring heavily in their ledgers.

A third theory is these private credit headlines reflect real, broader economic stress. Key default indicators already hit their highest-ever rates in January (roughly double the 2025 average), but reality could be even worse — remember how private credit has great flexibility? This also means that rather than defaulting, stressed borrowers might resort to quieter options like 'payment-in-kind' (adding their missed interest payments to the loan principal), or temporarily relaxing their loan maturity and covenant terms.

And that gets to some of the downsides around private credit: it's pretty opaque, with valuations updated quarterly by fund managers themselves, rather than constantly by markets. The result is investors might fear a sudden quarterly write-down, like BlackRock just delivered via one of its smaller funds, which recorded two hero-to-zero wipeouts in as many quarters (defaults from a home remodelling roll-up then Amazon aggregator).

So… we might need more roach-spray?

Intrigue’s Take

Welcome to Intrigue’s Take, where you’re going to want our view on two obvious questions:

First, which theory do we buy? Don’t get mad, but it’s a bit of all three: the SaaSacre is real, and those rising default rates are real, too. But yes, the funds are also now working as intended — those 5% redemption gates prevent a few cockroaches from needlessly infecting the whole house. The thing is, those same gates also hide our visibility of how many other cockroaches are even there, so it’s possible this is bigger than a few over-leveraged, AI-exposed tech firms.

Second, how bad could this get? The whole private credit sector is worth maybe $1.8T, aka an Australia, a Mexico, or a South Korea. Or in company terms, we’re talking the entire market cap of Taiwan’s TSMC semiconductor giant. So we’re clearly dealing with meaningful numbers here. But if you want to put it all in context, consider (per Dimon’s own shareholder letter yesterday), the entire US residential mortgage sector is now worth ~$13T, hence his line that, “in the great scheme of things, private credit probably does not present a systemic risk.”

But that’s not the same as concluding we can or should shrug this all off — there’s now real capital trapped behind those gates, unavailable for redeployment to hose other fires or seize other opportunities. So that liquidity mismatch means we’re still looking at a risk of (say) slower deal-flow, higher borrowing costs, and/or bigger market swings ahead.

Today’s briefing is presented by…

Meanwhile, elsewhere…

Extra Intrigue

🤣 Your weekly roundup of the world’s lighter news…

• The governor of St Helena off the coast of Africa has issued an official statement confirming the two-century-old giant tortoise known as Johnathan is alive and well, contrary to reports being circulated as part of a crypto scam.

• Delivery robots have started crashing through Chicago bus shelters.

• Amid lagging birth-rates, Japan has hosted its centuries-old annual fertility festival, parading all manner of giant phallic objects through the streets.

• British police are on the hunt for a mystery woman who (ahem) took a dump on a store shelf then casually fled the shopping centre.

• And Australia has added the (in)famous ‘succulent Chinese meal’ speech to its official national sound and film collection.

Car of the day

Our most viral joke (283,800 likes 🤩) simply took Putin’s own footage of his Pyongyang joyride with BFF and fellow dictator Kim Jong-Un, and put it to… the Top Gear theme song.

We bask in our own glory here because the particular car featured in that 2024 joyride was a Russia-built Aurus Senat armoured limousine. Unveiled during Putin’s fourth inauguration back in 2018, it was meant to be a great symbol of Russian self-reliance and prestige. When not giving these beasts away to North Korea’s Kim, he was taking other leaders for a spin, like India’s Modi at a regional summit in Tianjin last year.

With Aurus even taking over a Toyota plant in St Petersburg to ramp up production last year, it all burnished the image of an unstoppable Putin until… it all stopped. Putin’s own state media now reports the project’s big plans are on ice due to budget constraints!

So if the good ol’ days were all about Russia’s relentless self-reliance, maybe the Senat’s near-collapse is now a reminder of Russia’s underreported, wartime weakness.

Today’s poll

Last week’s poll: Do you think space exploration is worth its hefty price tag?

🚀 Yes, human progress is priceless (53%)
🌎 No, there are more pressing concerns (45%)
✍️ Other (write in!) (2%)

Your two cents:

• 🚀 R.H: “It’s proved its worth in the past — keep on shooting for the stars 😎”

• 🌎 T.B: “Mostly a boondoggle for a select few companies. Fix the roads first.”

• ✍️ D.W.R: “I'd prefer to see more collaboration amongst countries, rather than individual countries spending billions on the same things.”

• 🚀 D.M: “I worked on the Apollo project as a lowly semantic updater. It was the job of a lifetime. I was so disappointed that we dropped our efforts to colonize the Moon. It could have been ours.”