Companies need to move fast to refinance leveraged-buyout debt coming due over the next few years, according to ICG. “Folks should start getting ahead of it because the traffic jam may be more the issue than anything,” David Saitowitz, the $126 billion global alternative asset manager’s head of US liquid credit, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Mike Holland in the latest Credit Edge podcast. “That could be the kind of risk event that may push the market wider for a period of time,” he says, referring to credit spreads. They also discuss the AI funding bubble, collateralized loan obligation performance and fallen-angel risk.

Companies need to move fast to refinance leveraged-buyout debt coming due over the next few years, according to ICG. &ldquo;Folks should start getting ahead of it because the traffic jam may be more the issue than anything,&rdquo; David Saitowitz, the $126 billion global alternative asset manager&rsquo;s head of US liquid credit, tells Bloomberg News&rsquo; James Crombie and Bloomberg Intelligence&rsquo;s Mike Holland in the latest Credit Edge podcast. &ldquo;That could be the kind of risk event that may push the market wider for a period of time,&rdquo; he says, referring to credit spreads. They also discuss the AI funding bubble, collateralized loan obligation performance and fallen-angel risk.

The Credit Edge reviews the top credit news of the week and looks at the week ahead, with in-depth research of the most important corporate sectors, trends and themes. Analysis of specific corporate bonds and credit default swaps is backed by Bloomberg Intelligence's robust data sets and indexes.

The Credit Edge reviews the top credit news of the week and looks at the week ahead, with in-depth research of the most important corporate sectors, trends and themes. Analysis of specific corporate bonds and credit default swaps is backed by Bloomberg Intelligence's robust data sets and indexes.

The Credit Edge by Bloomberg Intelligence

LBO Debt Coming Due Is Next Big Test for Credit Markets, Says ICG

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Investors are increasingly wary of lenders who dish out so-called bad PIK, or payment-in-kind interest, to help struggling portfolio companies avoid default, according to Anant Kumar, global investment strategist at Benefit Street Partners, the private credit arm of $1.7 trillion asset manager Franklin Templeton. “If you’re a manager who wants to mask stress in the portfolio by doing that, you can probably fool some of the people some of the time,” he tells Bloomberg News’ Sinead Cruise and Bloomberg Intelligence’s Tolu Alamutu in the latest Credit Edge podcast. “I do think investors will catch on if you see a widespread use of PIK in the portfolio without any resolution.” Those managers will likely undershoot expectations when their next fundraising rolls around, Kumar says. The trio also discuss the resilience of private credit illiquidity premia, the specter of inflation and how an industry transparency push is forcing firms to address dubious marks faster than ever before.

Investors are increasingly wary of lenders who dish out so-called bad PIK, or payment-in-kind interest, to help struggling portfolio companies avoid default, according to Anant Kumar, global investment strategist at Benefit Street Partners, the private credit arm of $1.7 trillion asset manager Franklin Templeton. &ldquo;If you&rsquo;re a manager who wants to mask stress in the portfolio by doing that, you can probably fool some of the people some of the time,&rdquo; he tells Bloomberg News&rsquo; Sinead Cruise and Bloomberg Intelligence&rsquo;s Tolu Alamutu in the latest Credit Edge podcast. &ldquo;I do think investors will catch on if you see a widespread use of PIK in the portfolio without any resolution.&rdquo; Those managers will likely undershoot expectations when their next fundraising rolls around, Kumar says. The trio also discuss the resilience of private credit illiquidity premia, the specter of inflation and how an industry transparency push is forcing firms to address dubious marks faster than ever before.

Investors Keeping Score on 'Bad PIK', Benefit Street Partners' Kumar Says

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Data-center debt returns are falling, risk is rising and there’s uncertainty over what the properties may be worth in the long run, Wellington Management says. “We think a lot about that replacement value when evaluating data centers,” Sonali Wilson, the $1.3 trillion manager’s lead investment director for private credit, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s David Havens in the latest Credit Edge podcast. “Today, I’ll say — not every situation — but, by and large, it’s a pass,” she says. They also discuss commercial real estate investment strategies, how to position for AI disruption and why Wellington is building out a private-debt platform now.

Data-center debt returns are falling, risk is rising and there&rsquo;s uncertainty over what the properties may be worth in the long run, Wellington Management says. &ldquo;We think a lot about that replacement value when evaluating data centers,&rdquo; Sonali Wilson, the $1.3 trillion manager&rsquo;s lead investment director for private credit, tells Bloomberg News&rsquo; James Crombie and Bloomberg Intelligence&rsquo;s David Havens in the latest Credit Edge podcast. &ldquo;Today, I&rsquo;ll say &mdash; not every situation &mdash; but, by and large, it&rsquo;s a pass,&rdquo; she says. They also discuss commercial real estate investment strategies, how to position for AI disruption and why Wellington is building out a private-debt platform now.

Wellington Passes on Data Center Debt, Questioning Long-Term Value

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Collateralized loan obligations face a second straight year of equity losses, according to Eagle Point Credit Management, a major buyer. “Where we stand right now, it’s certainly possible,” Tom Majewski, the $14 billion private-credit manager’s founder and managing partner, says in this episode of the Credit Edge podcast, when asked about the chance of negative returns. “While there were some credit problems, oddly the bigger issue was the bull market and repricing of loans,” Majewski tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Reto Bachmann. They also discuss software-loan stress, business-development-company turmoil, lower returns in significant risk transfers and how Eagle Point is diversifying into hard assets like midmarket infrastructure lending.

Collateralized loan obligations face a second straight year of equity losses, according to Eagle Point Credit Management, a major buyer. &ldquo;Where we stand right now, it&rsquo;s certainly possible,&rdquo; Tom Majewski, the $14 billion private-credit manager&rsquo;s founder and managing partner, says in this episode of the Credit Edge podcast, when asked about the chance of negative returns. &ldquo;While there were some credit problems, oddly the bigger issue was the bull market and repricing of loans,&rdquo; Majewski tells Bloomberg News&rsquo; James Crombie and Bloomberg Intelligence&rsquo;s Reto Bachmann. They also discuss software-loan stress, business-development-company turmoil, lower returns in significant risk transfers and how Eagle Point is diversifying into hard assets like midmarket infrastructure lending.

Bull Run in Loans Slams CLO Equity Buyers, Says Eagle Point’s Majewski

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LBO Debt Coming Due Is Next Big Test for Credit Markets, Says ICG

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