Market moves past private credit crisis fears
The guest argued that fears of a systemic private credit crisis are overblown, suggesting value in high-quality, heavily collateralized BDCs trading at a discount.
The argument
Recent fund gating (such as Blackstone's BDC) reflects liquidity management rather than bad underlying credit. With 98% of loans collateralized in top-tier funds, the speaker suggests avoiding low-quality 'off the run' private credit while focusing on high-quality players.
The thesis, stress-tested
✓ What validates it
- ✓BDC share prices recovering to trade closer to or above net asset value
- ✓Stabilization or decline in investor redemption requests
▸ Risks discussed
- ▸Illiquidity risks if redemption gates remain closed for extended periods
- ▸Potential defaults in lower-quality, non-collateralized private loans
Hear it yourself
"here. And this is forward EPS growth, which is now nearing 30%. When I started sharing this chart with you a couple of months ago, it was it was below 20. So, you know, we just keep ratcheting up. Now here's here's an interesting takeaway too. I'd I'd said this on my ex post. I said, forward earnings growth upper revisions continue to rise higher as we noted yesterday. We had a post out on this yesterday. This is something you only see coming out of recessions. And if you go back and look at when you have very sharp up revisions in EPS, it's either coming out of, you know, a recession like 2008 or the dot com crisis."
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