The co-CEO of Oaktree Capital believes that there is "excessive risk-taking" behavior in the private credit market.

Armen Panossian, Co-CEO of Oaktree Capital Management, said that the softness in the software industry, liquidity concerns, and a series of poor underwriting performances are further widening the gap between public and private credit tools. Following the pandemic, interest rates have dropped and a large amount of funds have flooded into the credit market, especially in the private lending sector. Panossian stated that for retail-focused investment tools such as business development companies, fund managers are seeking to deploy funds quickly, leading to a relaxation of asset selection standards. "Whenever there is a large influx of funds in the short term, and cash drag has a significant impact on returns, you will see overly risky behavior," Panossian, who is also the CEO of Oaktree Specialty Lending, said in an interview with Bloomberg TV on Thursday. "The credit sector is like this, and so is the private credit sector - we have seen this over the past five to six years."