Apollo Global Management (APO) is moving into a aggressive defensive shell, stockpiling cash and purging high-risk assets as the private credit market faces a “reckoning moment.” On December 22, 2025, CEO Marc Rowan informed investors that his top priority is building “the best possible balance sheet” to ensure the firm is ready to profit when “bad things happen.”
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The shift comes as Apollo’s leadership warns that current asset prices have reached unsustainable levels while geopolitical tensions and “sticky” interest rates threaten to trigger a systemic shock. By cutting exposure to artificial intelligence loans and credit derivatives, the trillion-dollar asset manager is effectively betting that the current market exuberance is a bubble waiting to burst.
Rowan Prioritizes Liquidity over Aggressive Growth
In a series of private meetings and public appearances this month, Marc Rowan has been candid about his pessimistic outlook on the current investment climate. “As a company, not only are we in risk-reduction mode, but our balance sheet is also in risk-reduction mode,” Rowan told investors, citing a “cash-is-king” philosophy.
Apollo is currently operating in a state of high alert, with internal executives describing the atmosphere as “waiting on the edge” for the next major market surge or upheaval. This defensive posture is a direct response to Rowan’s belief that long-term interest rates will not fall as fast as the market expects, making high-priced equity and debt increasingly dangerous.
Apollo Is Purging AI Loans and “Compressed” Credit Derivatives
Apollo is aggressively cleaning its books by divesting from sectors that appear vulnerable to technological or financial bubbles. The firm is specifically reducing its exposure to software industry loans, fearing that rapid developments in artificial intelligence could disrupt borrowers’ business models and their ability to repay debt.
Simultaneously, Apollo’s insurance arm, Athene, is drastically scaling back its presence in the collateralized loan obligation (CLO) market. Rowan noted that spreads on these low-rated loan portfolios have become “completely and utterly compressed,” prompting the firm to cut its CLO exposure by half to $200 billion while reallocating tens of billions into safer government bonds.
Apollo Is Hedging Against Offshore Arbitrage and Systemic Risk
Beyond market prices, Apollo is sounding the alarm on a brewing crisis in the insurance sector caused by regulatory loopholes. Rowan has been a vocal critic of insurers shifting operations to the Cayman Islands, stating: “What people are doing is shifting operations to the Cayman Islands, where there are fewer rules and lower capital requirements.” He warned that offshore defaults could trigger a “contagion risk” for U.S. insurers who lack a federal backstop.
To insulate itself, Apollo has maintained a leverage ratio of just 0.58 in its flagship debt fund, significantly lower than its competitors, and has increased its interest rate hedging to protect profits as the Federal Reserve continues to cut rates under economic pressure.
Key Takeaway
The bottom line is that Apollo is calling the top. While retail investors and some Wall Street firms are still chasing the AI and “soft landing” rallies, one of the world’s most sophisticated credit investors is retreating to the bunker.
By dumping “compressed” derivatives and warning about the Cayman Islands, Apollo is positioned to be the buyer of last resort when the private credit “cockroaches” that Jamie Dimon warned about finally come into the light.
Is Apollo a Good Stock to Buy?
According to recent data, the firm maintains a “Strong Buy” consensus as it heads into 2026. Out of 11 analysts offering ratings over the last three months, 10 have issued a Buy recommendation, while only one suggests a Hold.
The average 12-month price target for APO shares sits at $162.91. This target represents a projected 11.32% upside from the recent trading price.
