Private Debt Investor Podcast

Having shot to prominence in the early part of this decade, have sustainability-linked loans (or SLLs) become an enduring part of the private credit landscape? Or have they quietly gone out of fashion? In this special edition of the podcast, co-hosted with PEI Group affiliate publication New Private Markets, we seek to chart the rise of sustainability-linked loans and assess how they are being used today. To recap: these loans feature a margin ratchet whereby the borrower’s performance against certain sustainability targets can result in a lower interest rate in the case of outperformance, or an increase in the case of underperformance. To help us assess the situation, we enlisted Nishan Srinivasan, head of origination and partner at Ambienta Credit. Since its inception in 2007, Ambienta has invested in companies operating in the realms of environmental and resource efficiency. Srinivasan spent 22 years at Credit Suisse, latterly as global co-head of leverage finance origination. He joined Ambienta in 2023 to help launch its credit platform. In the early days of SLLs it was not uncommon to see ratchets of 5 basis points relating to sustainability goals that were easily achievable, says Srinivasan. “Typically this was, dare I say, window dressing,” he said. “Quite de minimis in the context of the cost of the loan”. Fast forward to today and the targets are more ambitious, the discounts more meaningful – as much as 40bps – and there is more frequently a margin uplift in the event of failure.

In this episode, we examine some headline-grabbing company failures such as First Brands, Tricolor and Carriox – and ponder what lessons and insights there might be for the private debt asset class. While private debt exposure may have been relatively limited in these instances, can the asset class be confident that it has its own house in order? Jiri Krol of the Alternative Investment Management Association and Alternative Credit Council acknowledges there is stress in the system – but believes that stress may have already peaked and that, in general, private debt has once again demonstrated its resilience in tough times. But Matthias Kirchgaessner of Plexus Research is not convinced that private debt is immune from concerns around troubled companies, with fierce competition among lenders meaning that some due diligence shortcuts may have been taken.

Michael Nierenberg, CEO of Rithm Capital, shares insights on the booming world of asset-based finance (ABF). He highlights how ABF provides LPs with diversified cash flow and reduces corporate risk exposure. Nierenberg discusses the importance of origination and underwriting as competitive advantages in the market. He elaborates on leveraging securitization for strong returns while managing risk. With changing economic conditions, he points out promising sectors like data centers and energy transition, showcasing ABF's potential for future growth.

Join Randy Schwimmer, a private credit strategist from Churchill Asset Management, Laura Parrott from Nuveen focusing on investment-grade solutions, and Michael Massarano of Arcmont discussing the evolving landscape of private debt. They explore why M&A activity is surging despite economic uncertainty, the impact of inflation and unemployment on European markets, and the growing appeal of private investment-grade credit. Hear insights on regional market dynamics, relationship-driven deal wins, and the importance of scale and investor connections in navigating the private credit space.

This episode is sponsored by Arrow Global To be a successful player in the distressed lending market, one needs to understand the importance of timing. The current macroeconomic environment offers plenty of opportunities for distressed lenders looking to assist businesses struggling with market dislocation, bank retrenchment and policy uncertainty. However, lenders that look to take a more opportunistic approach to the strategy may not be able to deliver the kinds of returns sought by increasingly sophisticated investors. In this episode, we speak with Zach Lewy, founder, CEO, and chief investment officer of Arrow Global, to discuss the importance of taking a long-term view on potential targets and the opportunities and risks associated with the strategy. We also explore why default rates are no longer truly indicative of distress in the market and why lenders who have pan-European footprints are particularly well-placed to benefit from market dislocation.

Philip Sherrill, Blackstone's global head of insurance at the company's credit and insurance unit, joined to talk about why it chooses a "capital-light" approach to insurance investing. In addition, he expands on the growing homogenisation of how insurance investors access private credit, and how the policies they're underwriting influence that – across the globe.

Oaktree Capital Management’s announcement in early February that its Opportunities Fund XII had raised $16 billion – inclusive of co-investments and affiliated investment vehicles – represented the largest fundraise for an opportunistic/distressed debt fund to date. Brook Hinchman and Jared Parker – both managing directors and co-heads of North America for Oaktree’s Global Opportunities strategy, joined The Private Debt Investor Podcast to discuss the strategy and how a mixture of factors including tariffs, liability management exercises and the path forward for interest rates are influencing decision making as the fund’s investment phase is in full swing.

Michael Schad, Head of Secondaries at Coller Capital, played a pivotal role in the credit securities market post-crisis. Gerald Cooper, Co-Head of Secondaries Advisory at Campbell Lutyens, brings nearly two decades of experience in secondary transactions. They discuss the booming private credit secondaries market, highlighting massive recent deals like the $1.6 billion portfolio acquisition. They emphasize market dynamics, potential growth paths, and how evolving capital strategies could forever change investors' approaches to liquidity and diversification.

Over the last few years, talk of private credit’s “golden age” has grown louder, with predictions from various sources that the asset class could eventually grow to around $20-25 trillion in size from its current level of $2-3 trillion. Yet, fundraising has slowed since its peak in 2021. So was all the talk premature? Jess Larsen, founder and chief executive officer of private credit-focused placement agent Briarcliffe Credit Partners, believes that it was – but he also believes this is the year when a corner will be turned and private credit will start the journey that could see it one day become larger than private equity. In this episode, Larsen also shares his thoughts on direct lending and predicts that economy of scale will become all the more crucial, and could lead to the emergence of $100 billion evergreen mega-funds. On today’s hot topic of tariffs, he does not think signs of the investor response will start to emerge for another few months, but with volatility “the order of the day” in his words, he thinks it’s inevitable that LPs will focus on building all-weather portfolios that go well beyond the confines of direct lending.

This episode is sponsored by Rithm Capital The asset-based finance market is heating up, with a raft of private credit investors increasingly taking note of the strategy – and for good reason. Capable of delivering strong returns even in challenging macroeconomic environments due to its cashflow-oriented nature, ABF represents a rather unique offering for lenders and LPs alike. But contrary to what many might think, ABF is not a particularly new strategy. Michael Nierenberg is Chairman, Chief Executive Officer and President of Rithm Capital, a global asset manager focused on real estate, credit and financial services which makes direct investments and operates several wholly-owned operating businesses. In this episode, he explains how the market has evolved over his more than 30 years in the industry. He also discusses which industries are particularly well-positioned to benefit from ABF strategies and why he believes ABF is an area in which investors are underinvested.