Credit Exchange with Lisa Lee Lessons learned from First Brands and Tricolor – Tetragon co-CIO Dagmara Michalczuk
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Nov 7, 2025 Dagmara Michalczuk, Co-CIO at Tetragon Credit Partners and expert in credit markets, dives into vital lessons from the bankruptcies of First Brands and Tricolor. She emphasizes the significance of governance in credit investing and highlights the risks of dealing with non-transparent firms. Michalczuk shares insights on the slow macroeconomic growth outlook and the critical role of AI in credit analysis. She warns about potential disruptions in various sectors and stresses the need for vigilant underwriting quality in a competitive landscape.
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Governance Failures Fuel Credit Collapses
- The Tricolor and First Brands failures reveal governance and transparency as central credit risks.
- Private ownership and lack of independent oversight allowed problematic practices to proliferate.
Do Rigorous Due Diligence And Resize Quickly
- Do perform fulsome due diligence up front, including governance checks and collateral visits.
- Do reduce position size quickly when underwriting flags arise or facts evolve.
Dual Track Defaults Mask Real Losses
- Default metrics hide a dual picture: hard bankruptcies are low but restructurings add material losses.
- Expect a prolonged tail of elevated losses via out‑of‑court restructurings around 4%.