Private credit markets are under pressure from high interest rates, while excess demand is keeping spreads low, according to Wayne Dahl, co-portfolio manager for Oaktree’s global credit and investment grade solutions strategies. “I think there will be some general stress,” says Dahl in the latest Credit Edge podcast from Bloomberg Intelligence. “When people get excited, they put money in — the end investor has no choice but to invest that, and therefore you’ll maybe see spreads compress a little bit more than would otherwise be warranted,” Dahl tells Bloomberg News’ James Crombie and BI Senior Credit Analyst Mike Holland. Also in this episode, Dahl and Holland discuss risk in the health care sector, as well as opportunities in consumer staples, insurance and securitized credit. 

Private credit markets are under pressure from high interest rates, while excess demand is keeping spreads low, according to Wayne Dahl, co-portfolio manager for Oaktree’s global credit and investment grade solutions strategies. “I think there will be some general stress,” says Dahl in the latest Credit Edge podcast from Bloomberg Intelligence. “When people get excited, they put money in — the end investor has no choice but to invest that, and therefore you’ll maybe see spreads compress a little bit more than would otherwise be warranted,” Dahl tells Bloomberg News’ James Crombie and BI Senior Credit Analyst Mike Holland. Also in this episode, Dahl and Holland discuss risk in the health care sector, as well as opportunities in consumer staples, insurance and securitized credit.

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

Oaktree Sees Private Credit Stress as Excitement Grows

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Small-cap US companies are at risk of default as debt comes due and the economy slows, according to Alan McKnight chief investment officer at Regions Bank. “Look at the Russell 2000 — over 50% of those names are non-earners right now. They’re actually unprofitable,” McKnight says in the latest Credit Edge podcast from Bloomberg Intelligence. “There’s a lot of names in that sort of realm that could be on the tipping point, particularly in light of when they have to refinance their debt,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence credit analyst Matthew Geudtner. McKnight sees particular stress on companies exposed to low-income US consumers. McKnight and Geudtner also discuss opportunities in the industrial and defense sectors, including major borrowers like Honeywell and Lockheed Martin. 

Small-cap US companies are at risk of default as debt comes due and the economy slows, according to Alan McKnight chief investment officer at Regions Bank. “Look at the Russell 2000 — over 50% of those names are non-earners right now. They’re actually unprofitable,” McKnight says in the latest Credit Edge podcast from Bloomberg Intelligence. “There’s a lot of names in that sort of realm that could be on the tipping point, particularly in light of when they have to refinance their debt,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence credit analyst Matthew Geudtner. McKnight sees particular stress on companies exposed to low-income US consumers. McKnight and Geudtner also discuss opportunities in the industrial and defense sectors, including major borrowers like Honeywell and Lockheed Martin.

Junk Defaults May Rise on Small Cap Pain, Says Regions

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Antares Capital, the US-based private credit firm, is looking to expand in Europe and also sees opportunity in real estate, infrastructure and asset-backed finance. “In order to scale, we’d probably need to do an acquisition,” Tim Lyne, the direct lender’s chief executive officer, says in the latest Credit Edge podcast from Bloomberg Intelligence. “We are constantly evaluating Europe,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence senior credit analyst David Havens. Lyne and Havens also discuss Antares’ funding strategy, areas of market stress, fundraising and the broadening of the private credit investor base. “You’re beginning to see this democratization of the asset class,” says Lyne.

Antares Capital, the US-based private credit firm, is looking to expand in Europe and also sees opportunity in real estate, infrastructure and asset-backed finance. “In order to scale, we’d probably need to do an acquisition,” Tim Lyne, the direct lender’s chief executive officer, says in the latest Credit Edge podcast from Bloomberg Intelligence. “We are constantly evaluating Europe,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence senior credit analyst David Havens. Lyne and Havens also discuss Antares’ funding strategy, areas of market stress, fundraising and the broadening of the private credit investor base. “You’re beginning to see this democratization of the asset class,” says Lyne.

Antares CEO Eyes M&A Route to Private Debt Expansion

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 Politics and commercial real estate are the biggest perils for banks, according to Bloomberg Intelligence senior credit analysts Arnold Kakuda and Jeroen Julius. “In terms of CRE, it hits mostly the smaller regional banks,” Kakuda tells Bloomberg News senior editor James Crombie in the latest Credit Edge podcast from Bloomberg Intelligence. “If the sovereign rating comes down or is put on negative outlook, bank ratings are likely to follow,” Julius says, referring to European financial institutions. In addition, Julius and Kakuda debate unrealized losses sitting on balance sheets, consolidation, regulation and the outlook for more bank bond issuance. They also weigh opportunities in Additional Tier 1 and preferred debt. “You get high-yield returns for IG risk,” says Kakuda, speaking of the latter. 

Politics and commercial real estate are the biggest perils for banks, according to Bloomberg Intelligence senior credit analysts Arnold Kakuda and Jeroen Julius. “In terms of CRE, it hits mostly the smaller regional banks,” Kakuda tells Bloomberg News senior editor James Crombie in the latest Credit Edge podcast from Bloomberg Intelligence. “If the sovereign rating comes down or is put on negative outlook, bank ratings are likely to follow,” Julius says, referring to European financial institutions. In addition, Julius and Kakuda debate unrealized losses sitting on balance sheets, consolidation, regulation and the outlook for more bank bond issuance. They also weigh opportunities in Additional Tier 1 and preferred debt. “You get high-yield returns for IG risk,” says Kakuda, speaking of the latter.

Banks Run Into Real Estate Trouble, Political Strife

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Oaktree Sees Private Credit Stress as Excitement Grows

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