New entrants to the rapidly-growing private credit market, scrambling to deploy capital as demand exceeds supply, risk making loans that don’t perform well, according to Alan Schrager, senior partner and portfolio manager at Oak Hill Advisors. “You sort of love private credit tourists who potentially do bad deals, because bad deals that ultimately you don’t own make you look good on a relative basis,” Schrager says. “Even though we do think private credit is really cheap, we are trying to stay high quality,” Schrager tells Bloomberg News senior reporter Lisa Lee senior editor James Crombie in the latest episode of the Credit Edge podcast. Also in this episode, Bloomberg Intelligence senior credit analyst Arnold Kakuda weighs the outlook for banks heading into a tougher macro environment next year. Large financial institutions are well prepared for credit risk after withdrawing from some markets that private lenders stepped into fill, and they will be big bond issuers in January, according to Kakuda. Regional banks are more exposed to commercial real estate stress, he adds.

<p>New entrants to the rapidly-growing private credit market, scrambling to deploy capital as demand exceeds supply, risk making loans that don’t perform well, according to Alan Schrager, senior partner and portfolio manager at Oak Hill Advisors. “You sort of love private credit tourists who potentially do bad deals, because bad deals that ultimately you don’t own make you look good on a relative basis,” Schrager says. “Even though we do think private credit is really cheap, we are trying to stay high quality,” Schrager tells Bloomberg News senior reporter Lisa Lee senior editor James Crombie in the latest episode of the Credit Edge podcast. Also in this episode, Bloomberg Intelligence senior credit analyst Arnold Kakuda weighs the outlook for banks heading into a tougher macro environment next year. Large financial institutions are well prepared for credit risk after withdrawing from some markets that private lenders stepped into fill, and they will be big bond issuers in January, according to Kakuda. Regional banks are more exposed to commercial real estate stress, he adds.</p>

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.

<p>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.</p>

The Credit Edge by Bloomberg Intelligence

Private Debt ‘Tourists’ May Do Bad Deals; Bank Outlook

https://api.omny.fm/orgs/e73c998e-6e60-432f-8610-ae210140c5b1/clips/c44ecead-96d0-4044-86ef-b0df0111a33b/transcript

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