Private Credit Shockwaves - How a U.S. Collapse Could Hit British Businesses

18th October 2025

The recent bankruptcy of U.S. auto parts giant First Brands Group has sent tremors through global financial markets.

The aftershocks are beginning to reach British shores.

With over £8 billion in liabilities and a web of opaque financing, First Brands' collapse is more than a corporate implosion it's a wake-up call for the booming private credit industry.

What Is Private Credit and Why Should the UK Care?
Private credit refers to loans made by non-bank institutions, such as hedge funds and asset managers, often outside traditional regulatory frameworks. Once a niche corner of finance, it has ballooned into a £1.6 trillion global market, offering high-yield returns and flexible lending terms.

But flexibility can come at a cost. First Brands used complex off-balance-sheet arrangements to mask its financial troubles — a strategy that ultimately failed, leaving major lenders like Jefferies and UBS exposed to hundreds of millions in unpaid receivables.

UK Businesses in the Crosshairs
While First Brands operated primarily in the U.S., its supply chain stretched across Europe. British auto retailers and garages may soon feel the pinch as parts like wiper blades and filters become harder to source or more expensive.

More broadly, UK firms that rely on private credit — especially mid-sized manufacturers, retailers, and logistics companies could face tighter lending conditions. Interest rates are rising, and lenders are reassessing risk across the board.

"Private credit was seen as a lifeline for businesses shut out of traditional banking," says one London-based analyst. "Now, it’s becoming a minefield."

Investor Fallout
British pension funds and asset managers with stakes in U.S.-based private credit vehicles are also bracing for losses. Funds linked to Jefferies’ Point Bonita Capital, which held significant exposure to First Brands, have already seen sharp markdowns.

This could mean lower returns for UK retirement accounts and institutional portfolios a sobering reminder that financial contagion knows no borders.

Regulatory Ripples
The Financial Conduct Authority (FCA) is reportedly monitoring the situation closely. With U.S. regulators launching probes into hidden financing practices, UK watchdogs may follow suit, tightening oversight of private credit disclosures and risk management.

UK Exposure to First Brands & Private Credit RisksLocal Government Pension Scheme (LGPS)
Investment: Over £16 billion invested in private credit markets.

Risk: These funds are managed by asset managers who may hold positions in U.S.based private credit vehicles, including those affected by First Brands’ bankruptcy.

The lack of transparency in private credit structures such as off-balance-sheet factoring — has raised alarms about potential hidden exposures.

Wealth & Asset Managers
UK-based firms with global portfolios may have indirect exposure through:

Funds linked to Jefferies’ Point Bonita Capital

Syndicated loans and receivables tied to First Brands

Impact
Losses in these funds could affect institutional portfolios and pension returns.

What This Means for UK Institutions
Repricing Risk: UK borrowers may face higher interest rates and tighter lending terms.

Portfolio Volatility
Pension funds and insurers could see reduced returns from private credit-heavy allocations.

Regulatory Action
Expect increased scrutiny of private credit disclosures and risk management practices.

What Comes Next?
For UK businesses, the message is clear: diversify suppliers, scrutinise financing structures, and prepare for a more cautious lending environment. The private credit boom may not be over, but its risks are now impossible to ignore.

As the dust settles, one thing is certain — what happens in Wall Street doesn’t stay in Wall Street.