Bank Of America pledges $25 billion to expand private lending

Bank of America (BofA) has committed $25 billion of its own resources to private credit investments, building on its current direct lending business.

According to the Financial Times, the bank plans to source these transactions through its capital markets department, a unit within its investment banking arm.

BofA also promoted Anand Melvani to head of private credit for the global capital markets division. Mevani will still assume his position as head of Americas, leveraged finance, the FT reported.

The company was also mentioned Scott Wiate as head of private lending, structuring and underwriting. Waite will report Bruce ThompsonVice Chairman and Head of Enterprise Credit.

BofA is one of the latest Wall Street banks to challenge nonbank lenders as concerns about credit quality and market liquidity grow.

Blue Owl Capital announced Wednesday that it would change the method by which it offers redemptions.

CEO Craig Packer noted that headlines about the freeze on repayments in its private credit fund were a “complete mischaracterization of what is happening.”

Packer explained that the company has been offering 5% of shares in this fund for eight years, and instead of resuming that 5%, they are accelerating redemptions.

Other banks have committed capital to the private lending sector. There are concerns that the $1.7 trillion private credit market is beginning to crack under the pressure of higher interest rates and exposure to troubled sectors such as enterprise software.