(plural noun) a common household pest that has become shorthand for failing and perhaps fraudulent companies that have gorged on private credit
In the wake of the 2008 financial crisis, financial watchdogs did everything they could to discourage banks from making risky loans without setting aside enough capital to protect depositors from losses. In the process, they kick-started another industry. Private credit and hedge funds stepped into the breach and began using investor money to lend to risky companies, using often complicated financial structures.
While interest rates were low, these funds made money hand over fist. But 2025 saw the first cracks in this market with the US bankruptcies of subprime car lender Tricolor and car parts maker First Brands. Both companies had tapped a wide variety of credit funds and loan providers to keep themselves afloat. Accusations of fraud, including double-pledging, have been made regarding their finances.