The View From Apollo Private Credit Investing in a “Higher for Longer” Environment
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Apr 5, 2024 Apollo Chief Economist Torsten Sløk and Jim Vanek from Apollo discuss private credit investing in a 'higher for longer' interest-rate environment. They cover topics like market conditions, growth in private credit, opportunities for investors, tightening credit spreads, geopolitical risks, rising interest rates impact on leverage and default rates, and evolving landscape of private credit investments.
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Credit Market Dynamics
- Credit spreads have tightened considerably, pushing asset prices higher.
- However, high base rates maintain compelling yields, especially for higher-quality assets.
Deal Flow Dynamics
- Current refinancing activity primarily involves extending maturities, not creating new credit assets.
- Increased M&A activity is expected to create new opportunities, modestly widening credit spreads.
Geopolitical Impacts
- Geopolitical risks, especially US-China trade tensions, significantly impact specific industries.
- Changes in Chinese demand and global supply dynamics are crucial considerations for multinational companies.