LPC - Lending Lowdown Series

Michael Gross, co-founder and CEO of SLR Capital Partners, brings nearly 40 years of expertise in private equity and credit. He discusses the potential end of the 'golden age' for private credit, emphasizing the rising tide of defaults expected in traditional lending. Gross also dives into the rapid growth of Business Development Companies and how demand is shifting towards larger loans. He offers insights on navigating the complexities of asset-based lending amidst rising interest rates, blending optimism with caution for the future of credit markets.

Barry Bobrow, Head of Credit Markets for Regions Business Capital and founder of Asset Based Capital, dives into the contrasts between bank-arranged asset-based loans and those from direct lenders. He explains how asset-based loans can lead to low loss rates and high recoveries if managed correctly. Barry also explores the growing asset-based lending market, projected to hit $542 billion by 2024, and discusses the evolving role of banks versus non-bank lenders. Insights into asset valuation and market dynamics reveal the expanding opportunities in financing.

Connor Fitzgerald, a Portfolio Manager at Wellington Management specializing in fixed income, joins CJ Doherty to delve into the corporate bond market's dynamics. They discuss the impact of current fiscal policies, emphasizing the risks of aggressive tariffs. Fitzgerald highlights corporate resilience through enhanced credit quality and evaluates opportunities in high-yield sectors. The conversation shifts to navigating a steepening Treasury curve and building a resilient fixed income portfolio amidst market volatility, while also considering the potential for economic downturns.

CJ Doherty sits down with David Ells, Partner and Portfolio Manager at Ares Management and Ryan Moreno, Partner and Co-head of Leveraged Finance at DLA Piper, to discuss the intersection of private credit and insurance company capital. “The first thing about being an insurance company is that everything is viewed through a lens of capital,” Ells said. “You have to allocate capital against everything that you own.”

Arek Maczka, a Partner at Ropes & Gray, specializes in navigating leveraged financings for PE sponsors. He discusses the concept of debt portability, emphasizing its role in facilitating smoother transitions during refinancing. Arek outlines key terms like maximum leverage and identity limitations for sponsors while exploring how market changes have made portability more common. He also shares insights on its future relevance and the potential challenges lenders and borrowers may face, hinting that portable capital structures are gaining traction in today's financial landscape.

Frank Benhamou from Cheyne Capital joins host CJ Doherty to shed light on the Significant Risk Transfer (SRT) Market. "What we're seeing is an expansion both in terms of count, in terms of jurisdiction, as well as asset classes that it's being used on," Benhamou said. "So that create effectively a new opportunity."

Mustafa Adil, Head of Islamic Finance at LSEG, joins CJ Doherty to discuss the basic tenets of Islamic Financing and looks ahead to 2025. “The market has been growing substantially in the core markets in in which it operates,” said Adil. “There are 57 countries that have introduced Islamic finance regulations and where governments are actively supporting the development of Islamic finance.”

Host CJ Doherty speaks with Brian Himot, Head of Structured Capital at Strategic Value Partners, about capital solutions lending in both the US and Europe. "We think of ourselves as fitting in the space that is between traditional direct lending and private equity," said Himot. "There are a lot of opportunities that present themselves at different times through the cycle and when you have an evergreen strategy like ours, you need to have flexibility."

In this conversation, Ben Radinsky, a Partner at HighVista Strategies, sheds light on the world of Annual Recurring Revenue (ARR) loans. He explains how these loans provide stability for growth-stage companies, especially those facing low or negative EBITDA. Radinsky highlights the predictive nature of cash flows, making ARR loans appealing due to their tight covenants. The discussion also covers the advantages of private credit, the challenges of evaluating churn rates, and the promising performance of ARR lending compared to traditional financing methods.

John Kerschner, Head of U.S. Securitized Products & Portfolio Manager at Janus Henderson Investors joins CJ Doherty to discuss the growing CLO ETF and broader securitized market. "Securitized products are issued at the short end of the yield curve between one and five years," said Kerschner. "Now that the yield curve is inverted, meaning the short end has higher yields than the long end, that makes the overall yields of securitized products look very attractive."