The View From Apollo How Can Private IG Enhance Fixed Income Allocations?
22 snips
Feb 14, 2025 Discover the intriguing world of Investment Grade Private Credit as the hosts differentiate it from public credit and unveil its expansive $40 trillion market. Explore the benefits and unique structures of asset-backed finance, alongside the shifting dynamics between banks and private credit underwriters. Uncover the advantages of private bonds that offer higher returns and engage in a fascinating discussion on the parallels between private investment and culinary creativity. The conversation also touches on the rapid advancements in AI and their impact on investing.
AI Snips
Chapters
Books
Transcript
Episode notes
Broader Private Credit
- Private Investment Grade (IG) credit encompasses a broad $40 trillion market, unlike the narrower $1-2 trillion direct lending market.
- It includes various credit types like trade, non-bank financial, corporate, consumer, bank loans, and mortgages.
Private vs. Public IG
- Public IG credit is efficient but offers limited spreads, concentrated portfolios (banking, consumer non-cyclical, tech), and less downside protection.
- Private IG credit allows direct origination, enhanced due diligence, covenant control, and often secured structures, yielding higher returns (1-200 bps) and recovery rates.
Borrower's Perspective on Private IG
- Investment-grade companies choose private borrowing for flexibility and surety of execution, especially for non-standard deals.
- Private credit offers confidentiality and faster execution, complementing public debt for specific needs.
