JPMorgan Chase and Goldman Sachs are providing hedge funds with tools for shorting private credit.

According to sources, investment banks such as Goldman Sachs and JPMorgan are offering hedge fund clients ways to short the private credit market with a scale of up to $1.8 trillion. Sources reveal that these companies have set up a series of publicly traded company portfolios involving exposure to this sector. Due to discussions involving customized products, the sources requested anonymity. Goldman's index products differ, including one focused on European financial institutions with exposure to private credit; a portfolio covering business development companies; and a more broadly encompassing portfolio of alternative asset management companies. Sources say JPMorgan's basket includes alternative asset management companies and BDCs. In addition, clients can also invest in these indices. Bank of America previously launched a basket covering European financial companies with exposure to private credit, including Partners Group Holding AG, Deutsche Bank, and Anbang. However, the Financial Times reported on Thursday that the bank had withdrawn its recommendation to short European companies potentially impacted by private credit.