Apollo Global Management's John Zito delivered a blunt assessment of private markets during a closed-door UBS client event, warning that valuations are inflated and recovery rates on private-credit loans to software companies could fall to 20-40 cents on the dollar. The comments, captured in audio recordings reviewed by The Wall Street Journal, stand in stark contrast to the carefully worded public statements from private-credit executives who have sought to calm investor concerns about recent fund outflows.

Zito's remarks targeted what he called 'arrogance' in the private markets, suggesting that software company valuations are particularly disconnected from reality. He also criticized Federal Reserve Chair Jerome Powell's inflation commentary, suggesting it was aimed at needling President Trump. The Apollo executive emphasized that his firm's private-credit business remains on solid footing despite broader sector challenges, aligning with similar assurances from other major players in the space.

These comments come as private-credit lenders face mounting pressure from investors pulling money from funds amid rising default concerns. Zito's unusually candid assessment suggests growing unease within the industry about inflated valuations and potential credit losses. The stark difference between his private remarks and public messaging from other executives underscores the tension between maintaining investor confidence and acknowledging mounting risks in the private-credit sector.