April 17 (Reuters) - JPMorgan Chase ( JPM ), Barclays ( BCS )

and other Wall Street banks have started trading credit

default swaps linked to flagship private credit funds run by

Blackstone, Apollo Global and Ares Management ( ARES )

, the Financial Times reported on Friday.

Banks including Morgan Stanley ( MS ) and Citigroup ( C )

were offering to trade contracts on the three funds, the FT

report said, citing people familiar with the matter.

Reuters could not independently verify the report. JPMorgan ( JPM ),

Barclays ( BCS ), Morgan Stanley ( MS ), Citigroup ( C ), Blackstone, Apollo Global

and Ares did not immediately respond to a Reuters' request for

comment.

Credit default swaps (CDS) are derivatives that act as

insurance against the risk that a bond issuer - such as a

company, bank or government - fails to repay its debt.

Private credit funds are facing their most serious stress

test since the sector's rapid expansion following the 2008

financial crisis.

The news comes as S&P Dow Jones Indexes launched another

credit-default swap index linked to the private credit market

last week, giving investors a tool to bet against a sector that

has faced turbulence in the last few months.