FICC Focus Credit Crunch: Axar’s Axelrod on Zombie Owners and Credit Cycle
16 snips
Jan 14, 2026 Andrew Axelrod, Founder and CEO of Axar Capital Management, shares insights into the credit market's evolution and the ongoing challenges of distressed ownership. He discusses the concept of 'zombie owners' and how they misalign incentives, complicating recoveries. Axelrod also highlights the difference in reactions among banks, CLOs, and direct lenders, while emphasizing the benefits of private credit's non-mark-to-market approach. Open about labor market risks, he warns investors about potential inflation revival and urges focus on restructuring distressed firms in 2026.
AI Snips
Chapters
Transcript
Episode notes
Isolated Failures Not Systemic Risk
- First Brands and Tricolor were likely isolated underwriting failures rather than signs of systemic credit collapse.
- Andrew Axelrod views them as "cockroaches" not canaries and says hindsight supports that stance.
Economic Strength Dampens Distress
- A strong underlying economy has helped companies absorb credit stress and avoid large-scale defaults.
- That resilience, plus non-bank funding, gave borrowers room to maneuver and reduced market-wide contagion.
Non-Bank Funding Slows Crisis Dynamics
- Funding moving outside the banking system slows the speed at which problems get forced and resolved.
- Illiquid, non-mark-to-market owners can buy time with liability-management steps that contain volatility.