Last week’s June CPI report showed inflation running at 9.1%, higher than May’s number, dashing hopes that consumer prices had peaked. Data drivers were also broad-based, including energy, food and housing, challenging the Fed’s rate hike pace. Would 75 bps be enough, or will the Fed kick it up to a previously unimagined 1% later…
In our series on portfolio construction [link] we looked at how liquid and illiquid loan managers assemble quality all-weather assets. Because of the contrasting characteristics and behaviors of BSL and middle market, PMs work differently to extract and maintain value. In recent months, thanks to market volatility caused by higher interest rates, toppy inflation, and…
“Broadly syndicated loans are liquid, so have high volatility that exaggerates credit deterioration,” one market observer told us recently. “The middle market,” he continued, “is illiquid, so has low volatility which can mask credit deterioration.” How do PMs in these strategies manage through market volatility and maintain credit quality? Large cap loan buyers act like…
Many direct lenders have oriented their platforms around financing only businesses backed by private equity sponsors. While non-sponsored strategies have certain benefits, the presence of an owner with its own separate track record, select industry experience, and deal sourcing prowess to draft behind, gives relationship lenders distinct advantages. This is particularly true when it comes…
“What’s the key portfolio strategy managers should employ for success?” “Diversify!” That’s how one top PM answered our question. There are many levels and measures of diversity. You don’t want to be stuck with large exposures in any one industry, no matter how resilient it may seem. Healthcare, 20% of the US economy, is a…
What makes for successful portfolio construction in private credit? That was one of the questions panelists addressed at the Private Credit Investor Summit last week. The issue carries more urgency amid current public market turmoil. Equities tumbled this week after a worse-than-expected May CPI report. Besides the number itself (8.6%), highest in four decades, the…
What made Kane Tanaka so special? As the oldest living person on the planet until her passing last month, Tanaka-san was born (January 2, 1903) almost a year before the Wright Brothers’ historic first flight at Kitty Hawk. Her secret to a long life? “Being myself.” Sticking to your knitting was top of mind this…
The old Naval Air Station in Charlestown, RI was right next to the summer house we lived in as kids. Aviators would fly training patterns over our heads, so close we could see their orange flight suits. They would circle back to the airfield, touch wheels down, then come back around. Though we couldn’t see…
If it’s not one thing, it’s another. The FDA last month began a formal investigation into complaints that eating Lucky Charms was making people sick. On www.iwaspoisoned.com, a social media forum for food ingestion concerns, over 7000 reported serious stomach problems after eating the popular cereal. As responsible adults we had always assumed breakfast items…
We noted last week how various asset classes incorporate aspects of environmental, social and governance elements in their risk analysis of a business or manager. We wrap up our special series by examining how private credit integrates ESG into its various strategies. Credit managers are typically not involved in the direct management of businesses they…