Credit Exchange with Lisa Lee Blue Owl’s Craig Packer answers the tough questions about private credit
May 9, 2025
Craig Packer, co-president of Blue Owl and a pioneer in the private credit market, shares insights on the rapid growth of private credit and its potential to dominate leveraged finance. He tackles tough questions about market valuation discrepancies, the surge in Payment-in-Kind loans, and strategies for handling economic downturns. Packer believes that despite challenges, private credit will thrive as larger firms adapt to market shifts, creating opportunities amidst the evolving landscape of finance.
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Private Credit Not a Bubble
- Private credit is not a bubble; it has delivered excellent performance and is set up for continued strength.
- Financing stable, high-quality companies with modest leverage positions private credit well for downturns.
Handling Troubled Companies
- Be prepared to step in and manage troubled companies with a long-term perspective to protect investors.
- Build strong workout teams and resources for effective problem resolution in credit portfolios.
Size Matters in Workouts
- Smaller or newer private credit firms may lack workout resources, causing greater investor challenges.
- This differentiation will highlight stronger firms and does not taint the private credit industry overall.