PJT Partners CEO Paul Taubman predicts retail investors will no longer fuel growth in the private credit market, calling the current turmoil a "public relations" challenge. Speaking at the Milken Institute Global Conference in Beverly Hills, he said investors are increasingly realizing many private credit products aren't fully liquid.

The $1.8 trillion private credit market has faced recent upheaval from valuation concerns and fears about artificial intelligence's impact on borrowers. Taubman noted underwriting standards are tightening and predicted "nicks and bruises and losses along the way," though he doesn't view private credit as a systemic risk. Blue Owl Capital recently said sentiment in the industry is far grimmer than reality.

Taubman emphasized that private credit is fundamentally an institutional product, not a retail one. He warned that industries seeking retail capital must "treat it with kid gloves" after the unanticipated shift in investor liquidity preferences.