Tether pushes USDT into the $3 trillion private-credit market

Tether and Fasanara Capital launched StableFund to expand USDT-linked financing into the $3 trillion private-credit market. The sponsors committed $400 million in combined capital. StableFund plans to raise up to $3 billion from institutional investors. Fasanara will manage the portfolio. Tether will help originate financing opportunities and provide settlement and treasury infrastructure. Galaxy Research estimates that Tether controlled around 60% of the $23 billion centralized crypto-lending market at the end of June. That position represented roughly $13.5 billion in outstanding secured loans. An August Wall Street Journal analysis found worsening loan health and investor returns at publicly traded funds overseen by Ares Management, Blackstone, Blue Owl Capital and Golub Capital. Defaults at those funds reached their highest levels since at least 2021. Blue Owl's default rate rose to 2.8% in the second quarter. That was its highest level in at least five years. Large managers argued that portfolio credit quality remains resilient. Default rates remain below levels reached during more severe episodes such as the Covid-19 shock. The Financial Stability Board warned in May that private credit has not yet been tested through a prolonged economic downturn. The FSB identified weaker borrower quality, high leverage, opaque valuations and growing links between private funds, banks and insurers as potential vulnerabilities. The FSB also cited rising payment-in-kind arrangements and defaults as evidence of borrower stress. StableFund is structured as an evergreen vehicle that can continue raising and deploying capital without a predetermined maturity. Tether and Fasanara have not publicly detailed the fund's redemption terms. Fasanara manages more than $6 billion. It plans to deploy StableFund's capital into short-duration, asset-backed loans across a fintech network spanning more than 60 countries. The portfolio will include financing for small and medium-sized businesses and consumers. It will also include trade receivables and supply-chain credit. Tether will act as co-sponsor, originator and adviser. Tether will source opportunities linked to its stablecoin network. Tether will also supply on- and off-ramp connectivity and treasury rails. Fasanara will remain responsible for deploying the portfolio. The announcement does not say that Tether will make final underwriting decisions. It does not establish that USDT will serve as loan principal, collateral or the fund's denomination. The sponsors did not disclose how they would divide the $400 million commitment. They also did not disclose fund leverage, fees or whether either sponsor's capital would absorb losses before third-party institutional capital.