Private Credit to Face Shakeup If Economy Slows, Blue Owl Says
- NY Fed President Williams says eventually there will be rate cuts
- Ken Griffin still sees Fed cuts this year, even if it’s December
- Apollo CEO Rowan says university trustees “asleep at the wheel”
- Citi CEO Fraser expects the equity rally to continue
- Goldman CEO sees room for 10-15 market private-credit “leaders”
Photographer: Patrick T. Fallon/AFP/Getty Images
Scooping up consumer loans. Fortress Investment
Group is buying consumer loans and other types of asset-based debt from
financial technology firms and others, said Fortress co-CEO Drew
McKnight. He said his firm wasn’t active in the space before but had
purchased almost $2 billion of loans since September. Now it has a
pipeline of $3 billion of deals.
“It’s the most interesting thing in private credit right now,”
McKnight said. Those firms used to sell their loans to regional banks
until the string of failures last year made the institutions pull back,
he said. Financial technology and other online origination platforms
have since flooded hedge funds and private credit lenders looking for
buyers for their debt.
Apollo’s predictions for major changes.
Stephanie Drescher, the firm’s chief client and product development
officer, said more alternative asset managers will target high net-worth
individuals and other retail investors in the next two to five years.
“We’ve had a massive acceleration, really exceeding expectations for the
relationships that we have in wealth,” Drescher told Bloomberg TV at
the Milken conference.
Apollo is partnering with private banks and others to educate
clients on the benefits and considerations of private investments, she
said. And while historically people have thought of private markets as
riskier, public markets are “safe and risky at the same time that the
private markets are as well and it’s really construction of the
portfolio that matters.”
Border Deal Post-Mortem. Republican
Senator James Lankford of Oklahoma lamented the failure of the
bipartisan border deal he struck with Sinema, blaming it on
election-year politics. “We lost our season,” he said, saying the bill
could have passed if it was finished last year. “It’s not going away.”
Sinema said the White House and Democrats weren’t ready
to make the compromises last year that were ultimately needed, and the
process -- which she likened to going through the stages of grief --
couldn’t be rushed.
Updated 51m ago
Senators Sinema, Manchin want a party for moderates.
Arizona independent Kyrsten Sinema and West Virginia Democrat Joe
Manchin said they’d like to see a new third party that would appeal to
moderates. “I obviously think a third party would be great,” Sinema, who
quit the Democratic Party to become an independent, told Guggenheim
Partners Executive Chairman Alan Schwartz.
Sinema and Manchin warned against calls for the Senate to throw
out the filibuster. The body would turn into today’s dysfunctional House
“on steroids,” Manchin said. When Schwartz noted Sinema faced a lot of
pressure for opposing efforts to end the filibuster rule, she quipped,
“That’s where diamonds come from, Alan.”
Louisiana Republican Bill Cassidy added that the threat of a third party might do more to force the two parties to work together than actually starting one.
Updated 51m ago
Brookfield on Renewables Deals and AI. Connor
Teskey, CEO of renewable power and transition at Brookfield, said
dealmaking is booming in renewables because the sector is poised for
enormous growth, as AI drives demand affordable power.
“We’re still going to see a tremendous amount of growth for years and decades in this space,” Teskey said in an interview with Bloomberg TV. “The market environment today is going to lead to a ton of transaction of activity.”
“We’re still going to see a tremendous amount of growth for years and decades in this space,” Teskey said in an interview with Bloomberg TV. “The market environment today is going to lead to a ton of transaction of activity.”
Exxon on energy transition. White House
climate adviser John Podesta and ExxonMobil CEO Darren Woods didn’t
leave the stage without a little friendly sparring about the speed of
the energy transition. “My beef with him is I don’t think he’s going
fast enough,” Podesta said, adding that every month the world is setting
new records for heat as deadly floods and droughts cause havoc.
Woods retorted that rebuilding the world’s energy system is a
titanic effort, unprecedented in scale. It will take time. Plus, as a
public company, Exxon has a duty to balance the need to generate returns
for shareholders with cutting carbon. “The realty is there is no market
for carbon reduction yet,” Woods said.
Updated 1h 54m ago
Crescent Capital on Defaults.
There have been fewer defaults in credit than some in the industry were
expecting, including JPMorgan’s Jamie Dimon, according to Crescent
Capital co-founder Mark Attanasio.
“We have seen very
few defaults in any market and high yields,” said Attanasio, who is
also chairman of the Milwaukee Brewers. Stability in capital markets and
interest rates have left “plenty of opportunity” in private credit, he
said.
JPMorgan on Deals. Anu
Aiyengar, global head of M&A at JPMorgan, said dealmaking is up
sharply this year because of stable-to-declining interest rates.
Things are “much better than last year,” Aiyengar said in an interview Monday with Bloomberg TV. “The biggest difference I’d say is certainty. More realistic valuation expectation from sellers and a bit more, what do you say, courage in dealing with the regulatory environment.”
Health care, commodities, infrastructure are among the most active areas, while tech has slowed down a bit, Aiyengar said.
Things are “much better than last year,” Aiyengar said in an interview Monday with Bloomberg TV. “The biggest difference I’d say is certainty. More realistic valuation expectation from sellers and a bit more, what do you say, courage in dealing with the regulatory environment.”
Health care, commodities, infrastructure are among the most active areas, while tech has slowed down a bit, Aiyengar said.
As
for AI itself, OpenAI’s Lightcap compared it to technological
developments in agriculture. “We’ll wonder why we ever staffed people to
do those jobs,” he said. Someday, he added, “It will be foreign to anyone born today that you can’t talk to a computer the way you talk to a friend.”
OpenAI COO Brad Lightcap “pleasantly surprised” by regulators. He
said that regulatory conversations are necessary and have been “pretty
balanced.” He added, “We have to be careful not to stifle innovation.”
Centerbridge on Private Credit. Centerbridge
Co-Founder and Managing Principal Jeff Aronson says it’s an excellent
time to be in private credit because of the attractive base rate and
willingness of companies to engage. He is focused not just on financing
buyouts, but also companies that have “nothing to do with the buyout
world.”
Regarding Centerbridge’s partnership with Wells Fargo on a
private credit fund targeting middle-market, non-sponsor companies,
Aronson says he aims to serve customers looking for “something a little
different than banks historically have been willing to do.” He expects
others to adopt a similar model.
On commercial real estate, Aronson said sentiment is so negative that he’s “so attracted to it.”
Updated 2h 55m ago
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