Bank of America (BofA) has pledged $25 billion of its own funds towards private-credit investments, building on its current direct-lending activities. 

The bank intends to source these transactions through its capital-markets unit, a division within its investment-banking arm, according to the Financial Times.

BofA also promoted Anand Melvani to head of private credit for the global capital market division. Mevani will still assume his position as head of Americas, leveraged finance, the FT reported.

The firm also named Scott Wiate as head of private credit, structuring and underwriting. Waite will report to Bruce Thompson, vice-chair and head of enterprise credit.

BofA is among the latest Wall Street banks to challenge non-bank lenders, as concerns grow around credit quality and market liquidity. 

Blue Owl Capital announced on Wednesday that it would change the method by which it provides redemptions.

CEO Craig Packer noted that headlines surrounding the firm halting redemptions in its private credit fund were a "complete mischaracterization of what's happening." 

Packer explained that the company has been tendering 5% of the shares in this fund for eight years, and instead of resuming that 5%, they are accelerating redemptions.

Other banks have committed capital towards the private credit sector. There have been concerns that the $1.7 trillion private credit market is beginning to crack under the pressure of higher interest rates and exposure to struggling sectors like enterprise software.

Last February, JPMorgan increased its direct lending commitment to $50 billion, along with nearly $15 billion from multiple co-lenders, the bank announced. The strategic move was "designed to extend the firm's direct lending capabilities and provide tailored private credit solutions to meet the evolving needs of clients."

In September, Citigroup entered into a strategic partnership with Apollo Global Management to launch a $25 billion private credit and direct lending program, Apollo announced. 

That same month Wells Fargo announced its partnership with Centerbridge, which was focused on direct lending to non-sponsor North American middle market companies. Centerbridge launched Overland Advisors to manage the business development companies. Overland was targeting a minimum of $5 billion in investible capital, including $2.5 billion in equity commitments for the strategy, the press release stated.

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