The Insight by Oaktree Capital Vigilance
Dec 15, 2025
Christina Lee, Co-portfolio Manager at Oaktree, discusses the current landscape of private credit, arguing that recent bankruptcies are isolated incidents. Brook Hinchman, Co-head of North America for opportunistic credit, highlights AI's disruptive impact on software investments and the K-shaped divergence in chemicals and building products. Matt Pendo, Head of Corporate Development, emphasizes the resilience of earnings and the robust structure of BDCs in mitigating bank risks. Together, they explore the importance of meticulous underwriting and emerging opportunities in stressed credit markets.
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Direct Lending Issues Are Largely Idiosyncratic
- Direct lending will have defaults and isolated bankruptcies but not a systemic collapse.
- Christina Lee sees recent cases as idiosyncratic rather than broad-based across the market.
AI Is Reshaping Enterprise Software
- AI accelerates new enterprise software entrants and reduces barriers to entry.
- Brook Hinchman warns AI is slowing legacy software growth and will widen winners and losers.
Underwrite Software For Embedded, Mission-Critical Use
- Look for software that is deeply embedded or mission critical when underwriting deals.
- Christina Lee prioritizes retention, scale, and how hard it is to replace the software platform.