Direct lending remains a pillar of private credit, providing companies with new and flexible sources of financing in today’s high interest-rate environment. Laura Holson, Chief Operating Officer of Credit and Managing Director at New Mountain Capital, joins Bloomberg Intelligence’s Noel Hebert and Sam Geier on Credit Crunch to discuss the firm’s focus on “defensive growth” direct lending, and expansion into other areas of the private credit markets, including BDCs and CLOs. The conversation touches on collaboration within New Mountain, deal sourcing, the addressable market, direct lending risk premiums, secondary market viability, and more.

Government bonds sold off in the past weeks, due to tariff news from the US and the debt brake being eased soon in Germany and this has increased the probabilities of rate cuts by central banks, including the Fed. Credit rallied through this mayhem and the big question is, will this strength continue? In this episode of our Credit Crunch podcast, host Mahesh Bhimalingam, Global Head of Credit Strategy at Bloomberg Intelligence, and Pierre Krief, Head of Credit at CDC (Caisse Des Depots ET Consignations) discuss tariffs and debt brake effect on inflation, growth and central bank policy, its impact on global credit and the challenges of taking a directional view after the big rates moves.They discuss rates, yields and credit spreads along with curve steepening, the dollar weakness and their impact on credit.

“Even if we hear rumblings that NDAs are out there with third parties and private lenders are looking at assets,... we’re still in a position where — why wouldn’t they come back to us — because we have more to give,” said Patrick McGrath, partner at Anchorage Capital. “If I’ve invested in a structure and I have a group, I can give them more time. That’s valuable. I can address interest rates. I can probably provide the money a little bit cheaper and I can give them certainty as opposed to them saying I’m going to finance the business away.” McGrath sat down with Bloomberg Intelligence analysts Phil Brendel and Negisa Balluku at the Wharton Restructuring & Distressed Investing Conference last month (8:00). He dove into the intricacies of liability management exercises, including the asymmetry of information, discerning whether “deals away” are credible, and the importance of institutional reputation.Prior to that, BI’s Noel Hebert and Brendel discuss how March may shake up complacent high yield and syndicated loan markets. The podcast concludes with a BI roundtable discussion covering J&J, Franchise Group, Spirit Airlines, Yellow, Ardagh, WW International, and Serta Simmons (1:14:20).

Michael Cirami, Managing Director at Artisan Partners and expert in emerging debt markets, dives into the intricate world of geopolitical risk in fixed income. He argues that the Cold War offers valuable lessons for today’s investors. Cirami discusses distinctive investment opportunities in struggling nations, the evolving landscape of EM credit amid inflation, and India's rising fixed income appeal. He also highlights the complexities within China's economy and the potential impact of cryptocurrency on emerging markets.

Valentin Petrescou, a Senior Portfolio Manager at Lombard Odier Investment Managers with expertise in global macro strategies, discusses the shifting landscape of the U.S. dollar. He argues that emerging tariffs and trade war scenarios may not boost the dollar as expected. The conversation dives into currency diversification, spotlighting the yen’s role and its potential as a safe haven. They also touch on the fading prospects of euro-dollar parity and suggest more promising strategies in Euro-Swiss investments due to geopolitical tensions.

Ari Lefkovits, managing partner at Delos Capital, shares insights on hybrid capital solutions aimed at helping SMEs deal with high borrowing costs. The discussion uncovers trends in the private credit market, revealing the shift towards co-op agreements among lenders and the evolving default process. Lefkovits also highlights how hybrid capital can provide financial advantages amidst inflation and tariffs. This conversation offers a fascinating look at the current financial landscape and its implications for small businesses.

Lisa Pendergast, President and CEO of CREFC, offers keen insights into the commercial real estate landscape. They explore the shift in market sentiment post-COVID-19, highlighting a newfound confidence despite economic uncertainties. The conversation dives into potential office-space conversions amid rising interest rates and the factors driving changes in supply absorption. Pendergast also discusses the complexities of commercial loans and the challenges facing older properties versus newer constructions, providing a comprehensive understanding of current trends and future outlooks.

Atanas Bostandjiev, the founder and CEO of Gemcorp Capital Management, specializes in private credit investments in emerging and frontier markets. He discusses innovative strategies for mitigating risk while enhancing performance, emphasizing securitization and local dynamics. Bostandjiev highlights profitable sectors like infrastructure and power, along with the importance of exit strategies. He also dives into how U.S. economic policies influence emerging markets and the critical role foreign investment plays in unlocking growth potential.

In this engaging discussion, Chris Murphy, Co-Head of Derivative Strategy at Susquehanna, delves into the current state of financial market volatility and the unique behaviors of hedge funds. He highlights the low correlation in stock markets and shares strategies for capitalizing on volatility in individual stocks and commodities. The complexities of VIX call options and the recent rally in gold are also examined, providing insights into broader market expectations influenced by economic factors and Fed policies.

Tarek Abou Zeid, a partner and portfolio manager at Man AHL, brings his expertise in catastrophe bonds to the discussion. He dives into the fascinating world of cat bonds, exploring their rise following natural disasters and their role in diversifying investment portfolios. Real-world examples, from Hurricanes Andrew to the FIFA World Cup’s insurance strategies, highlight their innovative use in risk management. The conversation also touches on the dynamic between primary and secondary markets, as well as the promise of advanced technology in bond analysis.