The Compound and Friends

It’s Only a Bubble If You Panic

38 snips
Oct 24, 2025
Sonali Basak, Chief Investment Strategist at iCapital and former Bloomberg finance correspondent, provides keen insights into the private credit landscape. She discusses recent scrutiny over private credit, particularly with bankruptcies like First Brands. The conversation covers the importance of manager disclosure, the growth of private credit since 2008, and the risks associated with it. Sonali highlights the appeal of data center leases and new niches in private credit, urging rigorous diligence for investors navigating these complex markets.
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INSIGHT

Manager Selection Drives Private Credit Returns

  • Private credit returns have been strong and dispersed, so manager selection drives outcomes.
  • Blackstone's private credit rose nearly 13% showing large managers can perform well despite fear.
ADVICE

Ask Managers What They Actually Hold

  • Ask private credit managers what they actually underwrite and which loans they hold.
  • Do due diligence on holdings, underwriting, and sensitivity to the economy before investing.
INSIGHT

Bankruptcies Caused Noise, Not Systemic Losses

  • Two recent bankruptcies (First Brands, Tricolor) triggered worries but losses were tiny and dispersed across BDCs.
  • Most BDCs had near-zero exposure; a dozen had any exposure at all.
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