Last week we wrote about the growing gap between private capital winners and losers. That will only accelerate as today’s winners emerge from the higher rate market. Experienced managers with healthy, high-quality portfolios can and will continue to play offense and take market share. Our own portfolio expanded nicely despite a marked decline in overall…

The current brew of macro pressures and broader uncertainty have combined to fuel an intriguing effect across multiple dimensions. In 2024, we expect to see continued dispersion across three key market participants: private capital asset managers, private equity firms and portfolio companies. As we navigate slowing economic growth, volatility, and geopolitical shocks, it is even…

The US economy continues to roll along. December’s labor report showed 261,000 new jobs, a vigorous uptick from the 173,000 number in November. Market observers took this as a sign that the Fed’s projected three rate cuts for 2024 may be more back-ended. The current QT policy, draining liquidity from the financial system and bank…

2023 was characterized by several key themes in the capital markets. The Fed’s battle against inflation, the resulting impact on issuers of higher for-longer interest rates, a much slower M&A pace as buyers and sellers deal with mounting borrowing costs and compressed equity returns, and the steady disintermediation of buyout financings from public to private…

In the capital markets this year, it’s all been about rates and inflation: can the Fed’s higher-for-longer regime bring prices down close to pre-pandemic levels without triggering a recession? At the moment, the answer seems to be yes.  Both credit investors and issuers are using private capital as a vehicle proven resilient through rate, economic,…

Why is private credit getting called out for potential bubbles and systemic risk when banks have been the ones failing? We posed that question to Van Hesser, the chief strategist for KBRA. Mr. Hesser produces a weekly podcast, “Three Things in Credit.” His October 27th conversation about private credit, capital markets and the economy caught…

The confusion around differences between public and private credit dynamics has been compounded by the rapid growth of the illiquid asset class. The middle market was infrequently on investors’ radars until it began to rival broadly syndicated loans and high-yield bonds in size.  At $1.5 trillion, private credit has caught up with both, and by…

Two economic dynamics are driving capital markets. First, GDP strength which, by many measures, remains steady if not buoyant. One of our favorite contributors is Caterpillar.  Hard to think of a better representative of cyclical industrials than the Peoria, IL-based manufacturer of heavy “yellow-iron” equipment. The company reported a 12% revenue increase to $16.8 billion…

This week we chaired Day One of SuperReturn’s Private Credit US conference in New York. It’s a measure of the popularity of the asset class (and the outstanding agenda) that the auditorium was standing room only. Not including other SuperReturn strategy sessions on another floor. In preparing for the opening keynote, we gave thought to…

Since Labor Day we’ve spent considerable time at conferences and with investors. Nothing focuses the mind better. And what we’ve found is a disconnect between perception and reality.  Take the economy. Beginning a year ago, there was a growing worry that higher rates were going to plunge the US into a recession. Anyone calling for…