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Masters in Business

Armen Panossian on Credit in a Time of Rising Rates

Sep 22, 2023
Armen Panossian, head of performing credit at Oaktree Capital Management, discusses distressed debt investing, private credit markets for reasonable borrowers, changes in credit markets, interest rates and credit spreads, Oaktree's stability, AI in business, the Fed's transparency, and career advice for college graduates interested in finance in this entertaining podcast.
01:06:15

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • The dislocation in credit markets due to rising rates and excessive debt creates challenges for older transactions but presents opportunities for lending to large companies being bought out by private equity firms.
  • The market environment for private credit has shifted drastically, with demand for AAA-rated CLOs plummeting after quantitative tightening, leading to opportunities for direct lenders and widened pricing for first-lien debt.

Deep dives

Key Point 1: The credit markets are experiencing dislocation due to rapid rate increases and cracks in the economy.

The sudden increase in rates and inflation, along with the risks arising from borrowers that took on excessive debt during easier times, has led to dislocation in the credit markets. Older vintage transactions with high levels of debt and floating rate liabilities are facing challenges, while opportunities are arising for lending to large companies being bought out by private equity firms. First-lien debt is being offered at higher yields, presenting attractive investment opportunities.

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