In the high-stakes world of global finance, a heated debate is unfolding over the burgeoning private credit market, pitting banking giants against alternative asset managers. UBS Group AG Chairman Colm Kelleher has issued stark warnings about potential systemic risks stemming from private credit ratings, drawing parallels to the 2008 financial crisis. In response, Apollo Global Management Inc. CEO Marc Rowan has dismissed these concerns outright, labeling them misguided and defending the robustness of the private credit ecosystem.

The controversy erupted recently when Kelleher, speaking at a conference, highlighted how insurers are increasingly ‘shopping’ for favorable credit ratings in private markets, much like banks did with mortgage-backed securities before the last crash. According to a report in the Financial Times, Kelleher described this as a ‘looming systemic risk,’ emphasizing weak U.S. insurance regulations amid the private credit boom.

The Ratings Game Under Scrutiny

Private credit, often referred to as shadow banking, has exploded in size, managing trillions in assets outside traditional banking oversight. Kelleher’s critique focuses on the role of rating agencies, which he claims are being manipulated to inflate the perceived safety of these investments. ‘Insurers are shopping for grades as banks did before 2008,’ Kelleher stated, as quoted in the Bloomberg article on UBS’s warnings about systemic risks in the U.S. insurance sector.

This isn’t the first time Kelleher has sparred with private equity leaders. A 2023 Financial Times piece detailed similar exchanges where Kelleher’s comments on shadow banking risks were countered by Rowan, who argued that the asset management industry adds ‘robustness’ to the financial system rather than fragility.

Apollo’s Defiant Rebuttal

Rowan, in a direct retort covered by Business Insider, fired back: ‘He’s just wrong.’ Rowan explained that private credit’s structure, with its focus on long-term holdings and diversified risks, mitigates the very dangers Kelleher fears. He pointed to Apollo’s own performance, noting in a CNBC interview that the traditional investing model is ‘broken,’ and private markets offer a superior alternative by blurring lines between public and private assets.

Apollo’s third-quarter 2025 results, as reported by Investing News Network, underscore Rowan’s confidence. The firm reported strong inflows, bringing assets under management to $840 billion, with CEO Rowan stating, ‘Our outstanding third quarter results reflect broad-based momentum.’

Broader Market Sentiments and Warnings

Sentiment on social platform X echoes these tensions, with users like @kshaughnessy2 posting about the ‘big rewards, big risk world of private credit,’ highlighting defaults creeping up and regulatory concerns from bodies like the IMF. Another post from @UnicusResearch warned of banks’ ‘extend and pretend’ strategies creating systemic risks in commercial real estate and auto loans, potentially spilling into 2025 and beyond.

Industry analysts are divided. A Alternative Credit Investor article from UBS Asset Management downplayed bubble fears, stating that systemic risk concerns in private credit are ‘overstated.’ Conversely, a IndexBox analysis pointed to growing scrutiny over leverage and payment-in-kind structures masking borrower stress.

Echoes of 2008: Regulatory Gaps Exposed

Kelleher’s alarm bells resonate with historical precedents. In his The Banker mentioned comments, he linked private credit risks to broader insurance sector vulnerabilities, including European banks’ increasing dollar exposure. This comes amid warnings from the Bank of England, as noted in X posts by @onechancefreedm, about risks migrating to shadow banking entities like direct lending funds and CLOs, which now form a trillion-dollar market.

Apollo’s innovations, such as new risk-slicing methods pioneered by ex-UBS banker Alexandre Kartalis, have drawn attention. A eFinancialCareers report described Kartalis as the ‘mysterious’ figure behind structures that CEO Rowan is reportedly ‘stoked’ about, though they could amplify risks if underlying investments falter.

Investor Shifts and Economic Implications

The debate highlights a tectonic shift in investing, with private credit attracting pension funds and insurers seeking higher yields in a low-rate environment. However, as Financial Times coverage of Marc Rowan notes, this influx has ballooned assets, raising questions about transparency and regulation.

X users like @FirstSquawk amplified Kelleher’s warning: ‘UBS Chair Warns Of ‘Looming Systemic Risk’ From Private Credit Ratings – FT.’ Meanwhile, @GarrisonFathom discussed how references to 2008 are often dismissed as fearmongering, yet high-ranking officials like Kelleher are now voicing similar concerns.

The Path Forward: Balancing Innovation and Oversight

Amid these clashes, regulators are ramping up oversight. The IMF and other bodies have flagged private credit’s growth as a potential flashpoint, with X post from @kshaughnessy2 noting exposure in areas like subprime auto loans and commercial real estate, where ‘pretend and extend’ tactics delay but don’t resolve issues.

Rowan’s vision, as articulated in various outlets, positions private credit as a fix for broken traditional models. Yet, with Apollo at the forefront, the firm’s $61 billion inflows in Q2 2025, per Financial Times, underscore the market’s allure—and its perils if Kelleher’s predictions prove prescient.

Industry Ripples and Future Outlook

The sparring between Kelleher and Rowan encapsulates broader tensions in finance, where innovation meets caution. As private credit evolves, blending with public markets, the debate over systemic risks will likely intensify, influencing policy and investment strategies worldwide.

Recent news, including Business Insider‘s coverage of Rowan’s rebuttal, suggests this feud is far from over, with implications for trillions in assets and the stability of global finance.