Elliott Takes $2.5 Billion Aim at Texas Instruments’ Cash Flow
May 28, 2024
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Bloomberg News talks about Elliott Investment Management's $2.5 billion investment in Texas Instruments. Maria Korsnick debunks nuclear power myths. Fola Akinnibi shares New York's produce market story.
CEO Maria Korsnick dispels myths about nuclear power's use.
Businessweek details New York's produce market challenges.
Deep dives
Risks in the Private Credit Market
The private credit market, particularly in Europe, is experiencing significant growth, with the European long-term investment fund being established. However, concerns arise regarding deteriorating credit terms due to heightened competition among investors. The concentration of fundraising among larger players presents challenges, with potential risks for creditors. Diversification is beneficial, spreading risk across different investors with long-term perspectives, reducing systemic risks.
Expansion in the Private Credit Market
Private credit extends beyond direct lending into ABS markets, encompassing assets like auto loans, aircraft receivables, and commercial real estate. Potential growth areas include diversifying asset classes securitized for investment, attracting capital from insurance companies, pension funds, and sovereign wealth funds. The significant fundraising emphasis on major players could create concerns about terms and risks in deals.
Concerns About Retail Investor Involvement
The private credit market's growth sees a rise in retail and high net-worth individual participation, potentially raised from concerns about liquidity and disclosure risks for retail investors. There is an increasing allocation of capital from retail funds, where liquidity terms may not match investor expectations, highlighting the need for prudential regulations and clear disclosures to safeguard retail investors.
Addressing Liquidity and Disclosure Risks
The complex nature of private credit assets, including their illiquidity compared to traditional investments, raises concerns about investor awareness and preparedness for potential liquidity limitations. While some funds offer limited quarterly liquidity provisions, investors must understand the commitment and restricted access to their investment capital in private credit funds, emphasizing the importance of thorough disclosures and transparency in risk communication.
Management of Diversification and Concentration Risks
Despite the benefits of diversified risks across various investors in the private credit market, there is a notable trend towards concentration among larger players in fundraising, raising concerns about potential credit terms deterioration and competition for talent. The balance between growth and risk management becomes crucial in navigating the evolving landscape of the private credit market.
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg News Managing Editor of Technology Lynn Doan and Bloomberg News US Semiconductor Reporter Ian King discuss Activist investor Elliott Investment Management investing more than $2.5 billion in Texas Instruments pushing the chipmaker to improve its free cash flow. Maria Korsnick, CEO of the Nuclear Energy Institute, debunks the myths about the use of nuclear power. Bloomberg News CityLab Reporter Fola Akinnibi shares the details of his Businessweek story New York’s Biggest Produce Market Has Reached Its Breaking Point. And we Drive to the Close with Ana Arsov, Global Head of Private Credit & Financial Institutions at Moody’s Investors Service. Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.