Could the 'bank freezes' on private debt in the United States happen in Spain?

BarcelonaThe Spanish National Securities Market Commission (CNMV) downplays the risk of private debt funds, an investment instrument currently experiencing a crisis in the United States, with limited liquidity for investors in some cases, such as a playpenIn Spain, only eight of these free collective investment instruments operate, with a total of €913 million. This figure represents less than 1% of the total assets of this type of fund. In fact, the stricter controls primarily affect those acting as lenders, which have a quarterly or monthly liquidity window—shorter than other funds—for investors to withdraw their money. It does not affect free investment funds that invest in stocks, real estate, and other assets. Furthermore, there are practically no individuals or families among the capital of these free investment funds; the vast majority are institutional or professional investors, according to sources at the stock market regulator. The limited impact of these instruments, which manage around two trillion dollars in the US and have experienced periods of withdrawal restrictions, is due to European regulations and the oversight exercised by the CNMV (Spanish National Securities Market Commission). This structure, which provides loans to companies in exchange for offering participants higher returns in exchange for greater risk than other financial assets, also has many individual investors in the US. In Europe, it generally has a smaller presence.

The origin of the concern about these assets, which are subject to less regulation than traditional banking and included in the so-called shadow bankingThe concern arose when Jamie Dimon, the all-powerful CEO of the US banking giant JPMorgan Chase, warned a few months ago that "if you see one cockroach, there are probably more." He was referring to the bankruptcy of two automotive companies that caused losses for several US banks. The worry stems from the possibility that the defaults could affect not only specialized funds but also banks that have lent them money. Banco Santander recently warned in a Universal Register document—the report that banks send annually to regulators detailing potential credit risks—of the danger to institutions that have lent money to these types of funds.

A few days ago, Morgan Stanley, one of the giants of Wall Street, And the US investment company Cliffwater limited redemptions from two of its private credit funds. This decision, which generated considerable unease in US markets, came a week after a fund belonging to the giant BlackRock did the same. The withdrawal limit is the equivalent of a playpen for investors.