Bob Sahota – Finding middle ground with opportunities in Private Debt

To combat 40-year high inflation, central banks aggressively raised rates in 2022, causing almost all assets to reprice negatively. 

A significant conflict between Russia and the Ukraine, soaring energy costs, agricultural items, lingering supply-side issues, and staff shortages were all big, risk-off narratives. 

Exceptions to these declines were seen in commodities, commodity-related producers such as mining and materials companies; companies that benefited from reopening such as airlines; and inflation-linked securities which include private debt.  

As we begin 2023, consensus is that many developed market economies will enter recession. Corporate earnings are expected to decline, resulting in downgrades and valuations having to decline accordingly. Views on central bank policy are still mixed – rates are likely to continue their rise, albeit at a slower pace.  

This is the context in which we enter 2023. One of continued economic uncertainty. The quid pro quo, however, is that the environment for fixed income, or debt investments has changed dramatically. Private debt may now offer investors the potential for equity like returns. In this podcast, Ryan speaks to Bob Sahota, one of the most experienced private debt managers in the country. They talk through some of the key considerations for investors as it relates to private debt; and explore the idea that private debt can offer investors a middle ground. One that doesn’t face the same degree of risk from corporate earnings uncertainty in 2023 (as equities), or the continued risk of higher rates (as traditional fixed income).

Disclaimer:
The information in this podcast series is for general financial educational purposes only, should not be considered financial advice and is only intended for wholesale clients. That means the information does not consider your objectives, financial situation or needs. You should consider if the information is appropriate for you and your needs. You should always consult your trusted licensed professional adviser before making any investment decision.