WEBVTT - TPG Angelo Gordon Predicts Home Equity Borrowing Boom 0:00:18.160 --> 0:00:20.880 Hello, and welcome to The Credit Edge, a weekly markets podcast. 0:00:20.960 --> 0:00:23.640 My name is James Crombie. I'm a senior editor at Bloomberg. 0:00:24.239 --> 0:00:26.560 This week, we're very pleased to welcome TJ Durkin, head 0:00:26.560 --> 0:00:30.160 of structured credit and Specialty Finance at TPG. Angelo Gordon, 0:00:30.200 --> 0:00:30.840 How are you, Tj? 0:00:31.600 --> 0:00:32.680 Very well, Thank you for having me. 0:00:32.720 --> 0:00:34.400 Thank you so much for joining us, say, very excited 0:00:34.400 --> 0:00:36.760 to have you on the show. Also delighted to welcome 0:00:36.800 --> 0:00:39.120 back co host David Havens from Bloomberg Intelligence. 0:00:39.120 --> 0:00:41.040 Hello, David, Hey, great to be with you all. 0:00:41.360 --> 0:00:44.519 Also joining us with the questions from Bloomberg News, Carmen Arroyo. 0:00:44.680 --> 0:00:46.000 Great to see you, Carmen. How's it going? 0:00:46.280 --> 0:00:47.680 Thank you for having me, James. 0:00:48.280 --> 0:00:49.800 So, just to set the scene a little bit here, 0:00:49.880 --> 0:00:52.800 structure credit markets are booming as rates for the economy 0:00:52.800 --> 0:00:56.200 grows and asset backed securities look relatively cheap compared to 0:00:56.240 --> 0:00:59.200 other parts of fixed income. We've seen huge volumes of 0:00:59.200 --> 0:01:01.840 asset back deal including clos this year, and there's more 0:01:01.880 --> 0:01:04.880 to come in twenty twenty five. Private debt has also 0:01:04.920 --> 0:01:07.760 experienced a meteoric rise. It's now a one point six 0:01:07.880 --> 0:01:09.880 trillion market, but it could well be worth tens of 0:01:09.959 --> 0:01:13.280 trillions of dollars more when you wrap in asset based finance, 0:01:14.160 --> 0:01:17.440 very tight credit spreads, tons of issuance, and rising fund inflows. 0:01:17.480 --> 0:01:19.959 That doesn't mean that there's no risk out there. The 0:01:20.000 --> 0:01:22.600 FED started to cut rates, but yields remain high, and 0:01:22.640 --> 0:01:25.840 the stated aims of the next government all sound quite inflationary, 0:01:26.360 --> 0:01:29.440 signaling a period of higher for longer debt costs. That's 0:01:29.480 --> 0:01:32.320 going to hurt borrowers across the board, especially the weak ones. 0:01:32.800 --> 0:01:35.240 We're also seeing signs of private credit stress in the 0:01:35.240 --> 0:01:38.640 form of amendments, extensions and increasing number of loans being 0:01:38.680 --> 0:01:41.920 repaid with more debt, plus a rise into faults. In 0:01:41.959 --> 0:01:44.160 the background, we have a lot of geopolitical risk, which 0:01:44.160 --> 0:01:48.400 will only get worse as the Trump trade wars continue. 0:01:48.600 --> 0:01:51.840 Plus the threat of recession hasn't gone away entirely. A 0:01:51.920 --> 0:01:56.000 major downturn would cause more distress in credit markets. So TJ, 0:01:56.080 --> 0:01:58.080 let's start with you. I'm interested in your views on 0:01:58.120 --> 0:02:00.160 structured finance. To start with you, you've been doing that 0:02:00.200 --> 0:02:01.960 for a long time. Why the boom this year? 0:02:02.880 --> 0:02:05.840 Yeah, Well, listen, I think the main street economy, if 0:02:05.840 --> 0:02:09.040 you will, is still doing quite well. Public market spreads 0:02:09.040 --> 0:02:11.239 have certainly recovered from the wides of twenty twenty two, 0:02:11.320 --> 0:02:15.000 and you know that's usually a healthy environment for issue 0:02:15.000 --> 0:02:18.880 and so you've got a healthy economy, cooperative spreads, and 0:02:20.120 --> 0:02:23.919 capital looking for other places to go other than corporate credit. 0:02:24.840 --> 0:02:28.639 So record issuance volumes this year, does it continue next year? 0:02:28.639 --> 0:02:29.480 And what sustains it? 0:02:30.480 --> 0:02:33.639 Well, again, I think it's that same theme. So can 0:02:33.720 --> 0:02:36.520 it be sustained? I think absolutely. I think when you 0:02:36.560 --> 0:02:41.560 have healthy capital markets, you see the emergence of either 0:02:41.600 --> 0:02:44.560 newer issuers or newer products that maybe haven't been funded 0:02:45.600 --> 0:02:48.520 via the abs markets, and that's really the time to 0:02:48.600 --> 0:02:51.760 come to market. And so, you know, provided sort of 0:02:51.760 --> 0:02:55.720 the rest of the financial markets macroeconomic things stay in 0:02:55.800 --> 0:02:58.280 tune with where we are, I would expect heavy issuance 0:02:58.320 --> 0:02:59.480 to continue. 0:03:00.320 --> 0:03:03.000 You mentioned something that was interesting, which was like newer issuers, 0:03:03.080 --> 0:03:05.200 newer type of products. We've seen also a rice on 0:03:05.320 --> 0:03:08.480 esoterics this year. Is that new or are we going 0:03:08.560 --> 0:03:10.079 to continue to see that? And by that I mean 0:03:10.080 --> 0:03:15.000 like music royalties, like art bonds, like really weird stuff. 0:03:15.880 --> 0:03:18.240 Well, listen, I think some of the more niche products 0:03:18.280 --> 0:03:22.680 are probably still living in the private markets, whereas some 0:03:22.800 --> 0:03:27.360 of the more mainstream, if you will, products of today 0:03:27.400 --> 0:03:29.760 that weren't of yesterday. At things like data centers right 0:03:29.840 --> 0:03:33.800 or fiber to home. Those are probably more scalable assets 0:03:33.840 --> 0:03:39.200 that it makes sense to do the work to get 0:03:39.320 --> 0:03:42.280 public market funding because it's repeatable. And so I think 0:03:42.280 --> 0:03:46.280 there's a bifurcation between the very esoteric versus what might 0:03:46.360 --> 0:03:49.920 have been esoteric five years ago versus maybe becoming more 0:03:49.920 --> 0:03:50.720 mainstream today. 0:03:51.000 --> 0:03:52.800 And data centers are part of it, and I think 0:03:52.840 --> 0:03:56.240 that's AI related chips, all that world. 0:03:56.520 --> 0:03:59.119 Yeah, I mean that's clearly the probably most talked about 0:03:59.160 --> 0:03:59.760 theme in the market. 0:04:00.720 --> 0:04:02.840 You mentioned also like how a lot of this is 0:04:02.840 --> 0:04:04.920 going to the private markets. Can you talk us through 0:04:04.960 --> 0:04:06.880 a little bit of what you're seeing in private credit 0:04:06.920 --> 0:04:10.520 where that asset class is kind of growing or where 0:04:10.600 --> 0:04:11.120 is it going to? 0:04:12.600 --> 0:04:16.520 Yeah, So I think most people know private credit as 0:04:16.760 --> 0:04:22.000 direct lending right sponsoring sponsor backed private equity companies funding 0:04:22.040 --> 0:04:26.760 those purchases. I think that's where most investors got their 0:04:27.200 --> 0:04:29.920 toe hold in private credit. What's been happening under the 0:04:29.960 --> 0:04:36.120 surface is really the private assetbect finance space where I live, 0:04:36.200 --> 0:04:40.400 and that's been really slowly happening under the surface for 0:04:40.440 --> 0:04:44.159 a decade plus, right, there's been this natural evolution of 0:04:44.960 --> 0:04:47.040 what I'll call that the main street economy. So I 0:04:47.080 --> 0:04:52.359 think auto loans, real estate finance that were primarily traditionally 0:04:52.360 --> 0:04:57.880 funded by banks, depositories, the specialty finance universe has slowly 0:04:57.920 --> 0:05:00.000 been gaining market share, right, And that's just been how 0:05:00.000 --> 0:05:05.640 happening very organically, and that's where we have traditionally deployed 0:05:06.440 --> 0:05:08.559 private credit in the asset based space. We're either lending 0:05:08.560 --> 0:05:11.799 to those specially financed companies or we're buying their production. 0:05:13.800 --> 0:05:17.520 And then you had twenty twenty three happen, right, And 0:05:17.680 --> 0:05:19.640 I think that was the big wake up call of 0:05:21.160 --> 0:05:25.280 investors primarily saying, like, what's happening over there? Is there 0:05:25.279 --> 0:05:28.920 an opportunity for me to deploy capital and make good returns. 0:05:29.560 --> 0:05:33.200 And that's what got everyone's attention, right, And so this 0:05:33.279 --> 0:05:36.400 is something that's been happening, but certainly the events of 0:05:36.440 --> 0:05:40.039 March twenty twenty three created a lot more interest that 0:05:40.080 --> 0:05:42.880 we've seen, you know, going on eighteen months now, and 0:05:43.320 --> 0:05:47.920 we think that this is structural and we're in the 0:05:47.960 --> 0:05:48.760 early ennings of it. 0:05:49.000 --> 0:05:51.360 So those events in March twenty twenty three were the 0:05:51.400 --> 0:05:54.360 failure of some of the US regional banks. Credit Swiss 0:05:54.760 --> 0:05:58.760 imploded at that time as well. So it was an 0:05:58.839 --> 0:06:01.000 interesting time and it created a lot of opportunity. That 0:06:02.160 --> 0:06:04.599 vacuum seemed to have been filled pretty quickly in the 0:06:04.720 --> 0:06:07.600 in the market, just in in terms of the lack 0:06:07.640 --> 0:06:10.200 of volatility that we're seeing this year. But I'm curious 0:06:10.240 --> 0:06:13.600 where you're seeing the greatest opportunity right now, Like, what 0:06:13.960 --> 0:06:17.120 is when you throw your remit out into this sort 0:06:17.160 --> 0:06:22.080 of giant asset backed area, what's most interesting and how 0:06:22.160 --> 0:06:22.880 is that evolving? 0:06:24.080 --> 0:06:26.960 Well, I think what people thought was going to happen 0:06:27.200 --> 0:06:29.560 and coming out of March twenty twenty three was there, 0:06:29.560 --> 0:06:33.120 It's going to be a lot of asset sales, forced 0:06:33.160 --> 0:06:35.360 asset sales out of the regional banks. And to your point, 0:06:35.440 --> 0:06:38.480 there was some government intervention, the balance sheets were sort 0:06:38.480 --> 0:06:40.280 of short up, if you will, pretty quickly, and the 0:06:40.360 --> 0:06:44.160 volatility dissipated. And so if you fast forward today, we've 0:06:44.200 --> 0:06:46.800 seen maybe less than two handfuls of what I would 0:06:46.800 --> 0:06:51.400 call big forced asset sales coming out of the banks, 0:06:51.400 --> 0:06:53.200 and those have been I would say, very well attended. 0:06:55.600 --> 0:06:59.800 I think where we're seeing opportunity is lending to those 0:07:00.040 --> 0:07:02.719 on bank originators as they're scaling their business and taking 0:07:02.800 --> 0:07:06.120 market share. We think the risk adjusted returns there are 0:07:06.160 --> 0:07:10.560 just much better because there's less competition than fighting over 0:07:11.720 --> 0:07:13.920 assets coming out of the bank balance sheets. 0:07:14.080 --> 0:07:17.480 Yeah, what why aren't the banks chasing this market? 0:07:18.840 --> 0:07:22.120 Well, I mean I think of I buyfrecate the banks 0:07:22.120 --> 0:07:24.840 into two groups. You've got like the top fifteen that 0:07:24.920 --> 0:07:28.520 control pretty much the same amount of assets as the 0:07:28.560 --> 0:07:32.400 next four thousand, Right, So you've got the g SIPs 0:07:32.400 --> 0:07:36.040 if you will, that I think are optimizing capital, and 0:07:36.080 --> 0:07:41.320 then you've got the regional banks that are not deploying capital. 0:07:41.480 --> 0:07:45.760 So you know that's where there's opportunity in filling that 0:07:45.840 --> 0:07:48.720 gap again in the main street economy. So if you 0:07:48.720 --> 0:07:52.640 look at the regional bank balance sheets, you know eighty 0:07:52.680 --> 0:07:55.560 percent of that balance sheet is non corporate credit. It's 0:07:55.600 --> 0:07:58.160 these asset classes that my team and I focus on, 0:07:58.240 --> 0:08:01.320 and so with the healthy economy, there's a need for 0:08:01.520 --> 0:08:05.200 non bank capital to help bolster that origination. 0:08:07.240 --> 0:08:08.960 What kind of assets we're talking about here? Is it 0:08:09.000 --> 0:08:11.320 consumer loans? Is it car loans? Is it credit cards? 0:08:11.360 --> 0:08:12.520 What sort of deals? 0:08:12.800 --> 0:08:15.640 Yeah, I think it's everything from from the consumer oriented 0:08:15.640 --> 0:08:18.400 products to real estate related products, whether it's you know, 0:08:18.440 --> 0:08:25.160 commercial or residential, down to more hard assets like equipment finance. 0:08:25.480 --> 0:08:27.640 And that's all in good shape. I mean, the consumer 0:08:27.680 --> 0:08:30.320 at the lower end is not doing well. There's this 0:08:30.360 --> 0:08:33.200 perception in you know, direct lending as you call it, 0:08:33.240 --> 0:08:37.439 that you know, the weaker credits need to go private 0:08:37.520 --> 0:08:39.679 because you know that they don't really have the public option. 0:08:40.120 --> 0:08:42.360 Is it the same in the asset based markets, that 0:08:42.480 --> 0:08:44.600 you know, the weaker borrowers need to go to the 0:08:44.600 --> 0:08:46.439 asset based private markets. 0:08:47.679 --> 0:08:49.640 I don't know that to be the case. I think 0:08:49.720 --> 0:08:53.640 I think there's there's different things to sort of unpack there. 0:08:53.679 --> 0:08:58.040 I think, you know, the the weaker consumer demographic is 0:08:58.040 --> 0:09:02.800 certainly feeling the pain of inflation more a large part 0:09:02.800 --> 0:09:04.760 of that segment is actually not really even in the 0:09:04.760 --> 0:09:07.959 financial market, so sort of live paycheck to paycheck, you're 0:09:08.000 --> 0:09:11.800 not seeing that necessarily in terms of delinquencies and the 0:09:11.960 --> 0:09:14.040 like that you would see in auto finance as an example, 0:09:14.240 --> 0:09:19.960 we're definitely seeing i would say deviation in performance between 0:09:20.000 --> 0:09:22.760 different sponsors or different origination companies, and so that's where 0:09:22.800 --> 0:09:25.360 you really need to do the work. It's not a 0:09:25.720 --> 0:09:28.600 sort of beta trade, if you will, of auto finance 0:09:28.679 --> 0:09:31.240 is interesting, let's go all in. You have to really 0:09:31.360 --> 0:09:35.400 be discerning and who you're partnering with because as the 0:09:35.440 --> 0:09:42.240 economy starts to season more and you're seeing deviation between channels, 0:09:43.200 --> 0:09:44.959 that's really where you need somebody that's been in the 0:09:45.000 --> 0:09:46.880 space long enough to be able to tease that out 0:09:46.960 --> 0:09:49.640 during the underwriting and underwriting phase. 0:09:50.520 --> 0:09:53.120 So the growth of facet based finance is directly linked 0:09:53.120 --> 0:09:55.040 to what banks are doing, as you were saying, and 0:09:55.400 --> 0:09:57.160 as you mentioned, like last year we saw a lot 0:09:57.160 --> 0:09:59.040 of like asset sales, and this year we've seen a 0:09:59.040 --> 0:10:02.000 lot of like forward flow agreements and thanks kind of 0:10:02.040 --> 0:10:05.800 like pursuing more like synthetic risk transfers or bonds that 0:10:05.920 --> 0:10:08.520 help them kind of like strengthen their balance sheet. What 0:10:08.559 --> 0:10:09.920 do you expect to see next year? 0:10:10.360 --> 0:10:14.400 Yeah, no, I think things are are moving in concert. 0:10:14.400 --> 0:10:16.200 And so like if you if you break those two 0:10:18.320 --> 0:10:22.720 themes up right, there's there's CRT and SRT. I think 0:10:22.760 --> 0:10:28.080 what's being miscategorized is that that's an asset class that's 0:10:28.240 --> 0:10:31.440 really just a risk mechanism, no different than selling the 0:10:31.480 --> 0:10:33.720 loans or doing a securitization, right, So it's a different 0:10:34.000 --> 0:10:38.720 it's a different transaction mechanism, and so what we're focused 0:10:38.760 --> 0:10:42.040 on is staying very disciplined on making sure the CRT 0:10:42.200 --> 0:10:45.440 or SRT opportunities that we're looking at are core to 0:10:45.520 --> 0:10:48.800 our expertise. My team, for example, is not going to 0:10:49.240 --> 0:10:53.079 wander into looking at a CRT transaction off corporate revolvers. 0:10:53.160 --> 0:10:55.080 That's that's not our DNA, that's not where we have 0:10:55.120 --> 0:10:57.720 an edge. And so I think what you've seen this 0:10:57.840 --> 0:11:01.240 year has been a lot of leverage finance type opportunities 0:11:01.240 --> 0:11:03.960 and CRT. I think as the big banks move through 0:11:04.000 --> 0:11:07.560 that pipeline, as we cross into twenty twenty five, we're 0:11:07.559 --> 0:11:09.520 hopeful that we will get to our asset classes of 0:11:09.559 --> 0:11:12.160 consumer finance or real estate related and so I think 0:11:12.200 --> 0:11:15.240 that's more on the come. With regards to forward flows, 0:11:15.480 --> 0:11:19.880 that's really a technology or a concept that especially finance 0:11:19.920 --> 0:11:22.560 companies have used for a long time that now the 0:11:22.640 --> 0:11:27.440 regional banks are starting to utilize. And if you think 0:11:27.440 --> 0:11:30.000 about a regional bank, it's really just a consortium of 0:11:30.120 --> 0:11:31.959 origination platforms, right. 0:11:32.040 --> 0:11:32.559 And so the. 0:11:32.520 --> 0:11:37.120 Sophisticated ones, the sophisticated banks are saying, we keep reading 0:11:37.120 --> 0:11:40.760 about all this private credit capital formation, We've got the 0:11:40.880 --> 0:11:43.439 clients we've got the plumbing. We might not have the 0:11:43.520 --> 0:11:45.880 right type of capital anymore or the right quantum of 0:11:45.880 --> 0:11:49.040 capital anymore, but it seems like there's a marriage to 0:11:49.080 --> 0:11:51.559 be made. And so you're seeing it again and maybe 0:11:51.559 --> 0:11:53.800 start maybe with corporate credit, and I think it will 0:11:53.840 --> 0:11:56.760 continue to move into asset based I. 0:11:56.720 --> 0:11:58.920 Mean, just in the sort of interplay between the so 0:11:59.080 --> 0:12:03.760 called asset back securities market and the asset based finance market. 0:12:04.840 --> 0:12:08.239 Some people think of these as you know, almost interchangeable, 0:12:08.240 --> 0:12:11.000 that one is private and illiquid and the other is public, 0:12:11.360 --> 0:12:14.240 you know, and traded. Is that the correct way of 0:12:14.280 --> 0:12:16.800 looking at it? Does and does one shift to the 0:12:16.840 --> 0:12:20.640 other as we get all this private deck growth. 0:12:21.200 --> 0:12:24.240 Well, I think they're linked right in the sense of 0:12:24.559 --> 0:12:28.280 there is not public ABS creation without some form of 0:12:28.320 --> 0:12:31.560 private capital being ahead of that in terms of a 0:12:31.559 --> 0:12:35.480 warehouse financing or other types of aggregation vehicles to get 0:12:35.480 --> 0:12:38.680 to that critical mass where you can issue an ABS securitation. 0:12:38.720 --> 0:12:41.240 No one does twenty million dollar ABS steals. They do 0:12:41.280 --> 0:12:44.280 five hundred million dollar ABS steals, And so private capital 0:12:45.000 --> 0:12:48.920 is on that sort of value chain or conveyor belt 0:12:49.120 --> 0:12:51.559 before you get to the public ABS markets. And I 0:12:51.600 --> 0:12:54.360 think what you're seeing too is especialty finance companies are 0:12:54.360 --> 0:12:58.040 looking to diversify their their funding sources, and so when 0:12:58.080 --> 0:13:00.679 you have public markets really fall out of bed like 0:13:00.720 --> 0:13:04.160 they did in twenty twenty two, maybe solely relying on 0:13:04.200 --> 0:13:06.800 that for one hundred percent of your financing is not 0:13:06.840 --> 0:13:10.160 a good business strategy. And so you know, two years later, 0:13:10.240 --> 0:13:13.559 we're seeing more openness of saying we should have thirty 0:13:13.600 --> 0:13:17.520 percent of our origination funded privately or via forward flow, 0:13:18.040 --> 0:13:20.160 and the other seventy can go to the public abs 0:13:20.160 --> 0:13:24.680 markets or whatever. That right ratio is that necessarily wasn't 0:13:24.720 --> 0:13:28.640 in the mindset of CFOs or CEOs, especially finance companies 0:13:28.720 --> 0:13:30.200 prior to twenty twenty two. 0:13:30.320 --> 0:13:33.080 But when we talk about the esset based finance market 0:13:33.200 --> 0:13:36.360 coming into the tens of trillions, I mean Apoul's talking 0:13:36.400 --> 0:13:39.000 about forty trillion, Blacksman is talking about thirty trillion. Is 0:13:39.000 --> 0:13:42.240 that basically just taking all of the public abs market 0:13:42.320 --> 0:13:43.960 and putting it into the private market. 0:13:44.440 --> 0:13:47.240 Well, it's a combination of the public markets and then 0:13:48.600 --> 0:13:51.080 how much leaves the bank balance sheets, right, So it's 0:13:51.120 --> 0:13:52.240 a combination of those two. 0:13:52.400 --> 0:13:56.040 Okay, but you're outbeating the bushes with these sort of 0:13:56.080 --> 0:13:59.160 smaller well, a wide array of producers, but you're not 0:13:59.240 --> 0:14:01.360 solely focused and some of the large producers, like the 0:14:01.360 --> 0:14:04.479 public market is. You're looking at at sort of small producers, 0:14:04.520 --> 0:14:08.680 finance companies, specialty finance companies, captive finance companies, that sort 0:14:08.679 --> 0:14:08.959 of thing. 0:14:09.400 --> 0:14:13.760 Yeah, but again, even routine repeat abs or shares need 0:14:13.960 --> 0:14:16.280 that bridge capital, that warehouse capital in our in our 0:14:16.760 --> 0:14:20.240 vocabulary to scale to get to those critical masses. And 0:14:20.280 --> 0:14:24.800 so what we offer them is effectively revolver. So they'll 0:14:25.160 --> 0:14:28.120 originate those auto loans, get to that critical mass, the 0:14:28.280 --> 0:14:29.640 issue of the abs, they pay us down. 0:14:29.560 --> 0:14:30.560 And they start all over again. 0:14:30.640 --> 0:14:36.320 And so more mature scale companies may do four issuances 0:14:36.320 --> 0:14:38.520 a year, and so we'll according up and down four times. 0:14:40.120 --> 0:14:42.080 A less scale company may do that once a year, right, 0:14:42.120 --> 0:14:45.960 And so we're providing that capital to get them to 0:14:46.200 --> 0:14:48.840 what their end state desire is, which is public abs, 0:14:48.880 --> 0:14:51.040 which should be a cheaper cost of funding. 0:14:51.360 --> 0:14:54.480 So you're looking at a wide array of the economy, 0:14:54.480 --> 0:14:56.640 a wide array of asset classes, you know, sort of 0:14:56.640 --> 0:15:00.120 in that asset backed area. Commercial real estate is an 0:15:00.160 --> 0:15:03.640 area that's been a hot button, particularly the office segment, 0:15:03.680 --> 0:15:08.240 maybe not other areas to the same extent. So I 0:15:08.320 --> 0:15:10.520 think a lot if you look at the public markets, 0:15:10.560 --> 0:15:12.400 you look at where spreads are, it seems to be 0:15:12.400 --> 0:15:15.640 all rainbows and unicorns. Are you seeing rainbows and unicorns 0:15:15.680 --> 0:15:18.240 or are there a few black clouds out there as well? 0:15:19.160 --> 0:15:19.400 Well? 0:15:19.560 --> 0:15:21.760 I would say one observation that we have is that 0:15:21.880 --> 0:15:24.920 in general, risk seems to be priced in a pretty 0:15:24.920 --> 0:15:28.200 tight cluster. That's one thing that the team and I 0:15:28.240 --> 0:15:33.120 are very wary of, right in terms of what we 0:15:33.280 --> 0:15:35.040 like to say, in the public markets, their credit curve 0:15:35.120 --> 0:15:38.040 is very flat, and you're seeing that in terms of 0:15:38.280 --> 0:15:39.840 sort of private market pricing. 0:15:39.520 --> 0:15:41.600 As well, spread compression, spread. 0:15:41.400 --> 0:15:46.440 Compression, and quality isn't necessarily being rewarded, or certainly dangerous 0:15:46.440 --> 0:15:51.400 situations aren't being priced appropriately with regards to office and SIRI. 0:15:51.520 --> 0:15:55.480 I mean, ironically, I would tell you in the public markets, 0:15:55.520 --> 0:15:59.080 I think CNBS is probably the most interesting asset class 0:15:59.160 --> 0:16:05.800 because there's a lot of price disparity and discrepancy. I 0:16:05.840 --> 0:16:10.000 think there's a lot of historic holders who are sort 0:16:10.000 --> 0:16:13.160 of risk off at any level, just maybe based on 0:16:14.080 --> 0:16:17.280 what else is in their portfolio and legacy asset management issues, 0:16:17.320 --> 0:16:21.920 and so coming in with fresh capital and opportunistic lens. 0:16:21.920 --> 0:16:24.880 I think that's the most interesting space that we're seeing 0:16:24.920 --> 0:16:25.840 in the public market. 0:16:26.040 --> 0:16:28.320 Yeah, I mean that CIRA space seems to be, or 0:16:28.360 --> 0:16:32.960 the office areas is an interesting area because it really 0:16:33.000 --> 0:16:36.560 is a situation where location, location, location matters, and you 0:16:36.600 --> 0:16:39.080 really need to know the specifics of the asset itself, 0:16:39.120 --> 0:16:41.040 because you know, you can have one building next to 0:16:41.080 --> 0:16:44.120 one another, you know, across the street on Park Avenue 0:16:44.200 --> 0:16:47.480 or something or Broadway, and one is underwater and one 0:16:47.560 --> 0:16:50.280 is going gangbusters just because they've got the right rent 0:16:50.320 --> 0:16:53.840 roles and the right you know, amenities, facilities and things 0:16:54.280 --> 0:16:54.640 like that. 0:16:55.320 --> 0:16:55.920 No, we agree. 0:16:55.960 --> 0:16:59.760 I mean that's why you know, granular analysis is necessary. 0:16:59.760 --> 0:17:01.600 I mean, and there's a huge focus on what we 0:17:01.680 --> 0:17:04.840 call the saasby space, a single acset, single borrower where 0:17:04.960 --> 0:17:07.880 you can do that kind of private equity type underwrite 0:17:08.359 --> 0:17:10.680 even though it's a debt instrument. And I think that's 0:17:10.760 --> 0:17:13.800 where we've spent a lot of time over the last 0:17:13.800 --> 0:17:16.920 couple of years as it's been again a fertile hunting 0:17:16.920 --> 0:17:22.200 ground for I would say performing but discounted securities. I 0:17:22.280 --> 0:17:27.000 think the CMBs space where we see opportunity is not 0:17:27.080 --> 0:17:29.919 in terms of credit risk, where we can stay at 0:17:29.920 --> 0:17:32.600 the top of the capital structure. We've been seeing. The 0:17:32.680 --> 0:17:36.560 risk is the duration risk, meaning the loan may have 0:17:36.600 --> 0:17:39.680 a legal maturity of three years including all its extensions, 0:17:39.760 --> 0:17:43.720 but in reality, if the sponsor's paying that special service, 0:17:43.760 --> 0:17:45.439 is probably going to grant another extension. And so the 0:17:45.480 --> 0:17:47.960 market is trying to guess what's the duration of the 0:17:47.960 --> 0:17:53.679 cash flow, not necessarily the credit worthiness of it at 0:17:53.680 --> 0:17:55.320 the triple A level or the double A level. 0:17:56.160 --> 0:17:59.840 So another concern in the commercial real estate market was 0:18:00.080 --> 0:18:01.920 at least last year, was how many of these loans 0:18:01.920 --> 0:18:04.960 are in banks balance sheets? And we haven't really seen 0:18:05.000 --> 0:18:09.920 any stressed asset sales on CRE especially in office. When 0:18:09.960 --> 0:18:12.280 is that going to happen? Is it going to take years? 0:18:12.480 --> 0:18:15.880 Or I mean, if you go back to twenty twenty three, right, 0:18:15.920 --> 0:18:19.719 you've seen, I say, a very accommodative regulatory regime when 0:18:19.760 --> 0:18:21.840 it comes to the banks and their balance sheets and 0:18:22.280 --> 0:18:23.199 the capital ratios. 0:18:23.280 --> 0:18:23.480 Right. 0:18:24.320 --> 0:18:25.959 I remember we used to come in every morning and 0:18:26.000 --> 0:18:29.400 we get a new research reports, you know, sorted by 0:18:29.920 --> 0:18:32.959 percent office, percent non performing percent of their Tier one capital, 0:18:33.000 --> 0:18:36.640 and like that's obviously not been the case for late 0:18:36.720 --> 0:18:41.159 So it feels to me like there's this long play 0:18:41.280 --> 0:18:44.480 going on that there's an organic way for them to 0:18:44.520 --> 0:18:47.200 sort of de risk out of it versus a rip 0:18:47.240 --> 0:18:50.159 the band aid approach that people honestly may have been 0:18:50.160 --> 0:18:53.000 hoping for in terms of distressed asset sales. Sitting in 0:18:53.040 --> 0:18:56.360 our seat, maybe we can just switch gears a little bit. 0:18:56.960 --> 0:18:58.760 As you may know, there was an election in this 0:18:58.800 --> 0:19:04.120 country just to few weeks ago. When when you all 0:19:04.160 --> 0:19:07.439 came in on Wednesday or later that week after the election, 0:19:07.640 --> 0:19:10.560 what sort of conversations did you have? How does it 0:19:10.680 --> 0:19:12.159 change your strategy? 0:19:12.600 --> 0:19:12.639 What? 0:19:12.960 --> 0:19:13.160 What? 0:19:13.960 --> 0:19:17.280 How do you see the market changing, the opportunities, the 0:19:17.359 --> 0:19:20.439 risks changing as the new administration comes in with some 0:19:20.480 --> 0:19:22.640 of the some of the policies that they're talking about, 0:19:22.640 --> 0:19:25.280 and some of the people coming into that might be 0:19:25.320 --> 0:19:26.360 coming into the cabinet. 0:19:27.840 --> 0:19:31.760 Well, I think, just from a regime perspective, I think 0:19:31.920 --> 0:19:35.480 the FTC loosening of M and A is good for 0:19:35.600 --> 0:19:37.840 what we're looking at, which is the banks. Right, there's 0:19:37.880 --> 0:19:41.119 clearly too many banks in this country. You get a 0:19:41.119 --> 0:19:44.400 more relaxed M and A environment that should help both 0:19:44.440 --> 0:19:46.720 solve the problems of their their balance sheets and their 0:19:46.760 --> 0:19:50.240 capital ratios. But probably more exciting for US is and 0:19:50.240 --> 0:19:53.040 I've seen this throughout my career. As good markets are bad, 0:19:53.119 --> 0:19:56.320 bank M and A almost always creates asset sales, and 0:19:56.400 --> 0:20:00.320 so that to us might be the catalyst versus stressed 0:20:00.320 --> 0:20:04.560 markets of twenty twenty three sort of you know, productive 0:20:04.640 --> 0:20:08.040 mergers but still creating asset sales. 0:20:08.080 --> 0:20:10.639 So that's what's exciting to us. I think. 0:20:12.040 --> 0:20:13.960 The rest of it is not. I think a lot 0:20:14.000 --> 0:20:17.040 of the other policies you ran on not necessarily to 0:20:17.040 --> 0:20:19.240 affect this market, right right. 0:20:19.800 --> 0:20:22.680 Interested in what you said earlier bills about some dangers 0:20:22.840 --> 0:20:26.320 of potentially you know, risk isn't being priced. We're seeing 0:20:26.320 --> 0:20:28.280 that a lot in the public markets across the bulge 0:20:28.320 --> 0:20:33.600 and triple c's to you know, double B bonds. What 0:20:33.640 --> 0:20:37.000 are you saying in structed markets? That stands out. 0:20:37.680 --> 0:20:41.480 Again, I think as you get into certain spaces, the 0:20:41.520 --> 0:20:44.639 auto space as an example, or the consumer finance space, 0:20:46.119 --> 0:20:50.119 there's a lot of different origination platforms and that performance 0:20:50.160 --> 0:20:53.240 tiering is becoming more and more prevalent, but the pricing 0:20:53.359 --> 0:20:56.639 on those assets or those securities does not reflect it, right, 0:20:57.680 --> 0:21:00.119 And we've been very surprised that they're sort of has 0:21:00.160 --> 0:21:02.600 not been a rerating, if you will, some of the 0:21:02.680 --> 0:21:06.760 lower tier originators versus the upper tier. 0:21:06.920 --> 0:21:10.320 So you're talking about the maybe some of the subprime 0:21:10.400 --> 0:21:15.159 and non prime borrowers used car markets things exactly. 0:21:15.240 --> 0:21:16.600 And you know, even if you look at the non 0:21:16.600 --> 0:21:19.960 prime auto space, there's some originators that are performing as 0:21:20.000 --> 0:21:23.240 they normally have, right they've had they had good control 0:21:23.280 --> 0:21:26.600 on their credit. Maybe some of the smaller, newer or 0:21:26.640 --> 0:21:29.520 faster growing company has lost a little control on that. 0:21:29.600 --> 0:21:32.320 But yet the asset pricing, if you were to look 0:21:32.320 --> 0:21:35.400 in the public markets, the triple B bonds, they don't 0:21:35.400 --> 0:21:38.920 really price that differently, and we don't see the rationale 0:21:39.000 --> 0:21:41.320 behind that. So we're being patient, and that's not a 0:21:41.359 --> 0:21:45.359 space where we're overly active on price compression. 0:21:45.800 --> 0:21:48.760 It's interesting what you were saying is especially and I'm 0:21:48.760 --> 0:21:50.720 going to use this example but feel free to change. 0:21:50.720 --> 0:21:53.600 But in this as our team market, we've seen some 0:21:53.640 --> 0:21:56.040 of those bonds kind of priced really really really tight, 0:21:56.440 --> 0:21:59.160 and still we are seeing a lot of buyers coming 0:21:59.160 --> 0:22:01.360 in and you know, willing to take on that risk 0:22:01.400 --> 0:22:04.560 for maybe like not that much like you know, payment 0:22:04.680 --> 0:22:07.080 or like you know, pricing. How tight does it have 0:22:07.160 --> 0:22:10.280 to get for buyside to stop deploying so much? 0:22:11.400 --> 0:22:14.160 Well, I think I think that space, the the SRT 0:22:14.320 --> 0:22:18.159 and the CRT space is interesting because you're in the 0:22:18.240 --> 0:22:21.320 early innings of of what I think will be a 0:22:21.359 --> 0:22:25.720 continued wave of issuance, and it doesn't fit the natural 0:22:25.760 --> 0:22:28.320 buyer base of credit risk. Meaning if you think about 0:22:29.680 --> 0:22:32.960 rated abs bonds or corporate credit securities that are going 0:22:33.000 --> 0:22:39.760 into daily liquidity bond funds or ETFs, they these instruments 0:22:39.800 --> 0:22:42.040 are a bit more liquid, they might not have a 0:22:42.160 --> 0:22:46.760 rating despite the fact that on an underwriting perspective it's 0:22:46.800 --> 0:22:49.400 really good risk, right, it just doesn't It doesn't take 0:22:49.440 --> 0:22:50.840 the box of traditional issuance. 0:22:50.840 --> 0:22:51.280 And so. 0:22:52.680 --> 0:22:55.040 I think that's why buyers are still interested in the 0:22:55.080 --> 0:22:57.800 space despite it tightening from you know, twelve months ago, 0:22:57.880 --> 0:23:00.920 because on a relative value, it's off and compelling returns. 0:23:01.520 --> 0:23:03.160 So I think there's probably still room to run. 0:23:03.200 --> 0:23:06.639 Actually, what about other parts of structure though, TJ. You know, 0:23:06.640 --> 0:23:10.000 you've heard the whole year people saying structure products are great, 0:23:10.080 --> 0:23:12.119 we have to start buying more of them because you know, 0:23:12.160 --> 0:23:15.879 investment grade bonds just got so tight and everything's so 0:23:15.920 --> 0:23:18.960 expensive in the other markets. Does that continue? Is there's 0:23:18.960 --> 0:23:22.400 still that kind of gap between the two in terms 0:23:22.400 --> 0:23:24.280 of prising and you've got all this new money piling in. 0:23:24.400 --> 0:23:26.240 You know, there's just a ton of bid for fixing 0:23:26.280 --> 0:23:28.240 come across the board. Everyone wants yield at this point. 0:23:28.320 --> 0:23:30.800 Does that gap between the two markets get. 0:23:30.640 --> 0:23:37.560 Squashed Historically No, Historically the asset based space always has 0:23:37.600 --> 0:23:40.800 a little bit of a spread premium to the corporate space. 0:23:40.880 --> 0:23:45.320 I don't see that, you know, inverting anytime soon. But 0:23:45.440 --> 0:23:49.520 with that being said, I think there's plenty of issuance 0:23:49.560 --> 0:23:53.680 to sort of sort through. I think again, we actually 0:23:53.680 --> 0:23:55.800 probably think the top of the capital structure is more 0:23:55.840 --> 0:23:57.679 compelling than the bottom, kind of going back to that 0:23:57.760 --> 0:24:00.760 comment on the credit card being flat and so, you know, 0:24:00.800 --> 0:24:04.840 a flexible capital we're able to kind of dial up 0:24:04.920 --> 0:24:08.280 or down the credit risk and wait for better opportunities 0:24:08.280 --> 0:24:10.480 maybe at the bottom of the capital structure. 0:24:10.920 --> 0:24:13.840 I have a question on the lpiece. We've kind of 0:24:13.880 --> 0:24:16.879 like heard all year how limited partners were asking money 0:24:16.880 --> 0:24:19.520 managers to go a little bit more into esoterics or 0:24:19.800 --> 0:24:23.200 into asset based finance because they were already like kind 0:24:23.200 --> 0:24:28.040 of like very like very present or write and direct lending. 0:24:28.560 --> 0:24:30.800 What are the LPs asking now where do they want 0:24:30.840 --> 0:24:32.960 to go? Like do they want to buy more infraud. 0:24:33.000 --> 0:24:35.040 Do they what are they interested in? 0:24:36.480 --> 0:24:40.760 Well, I think they're looking for diversification, right, They're looking 0:24:40.840 --> 0:24:44.919 for diversification because they might feel over exposed to corporate credit. 0:24:45.640 --> 0:24:49.280 They're looking for diversification because there's sort of tearing going 0:24:49.320 --> 0:24:52.600 on with pick or LME and when you think about 0:24:52.640 --> 0:24:55.240 the premise of asset base, some of that just can't happen, right, 0:24:55.520 --> 0:24:58.080 My SPV can't be stripped of the assets, and so 0:24:58.440 --> 0:25:03.439 I think there's appealing aspects of private abs. The duration 0:25:03.520 --> 0:25:07.280 profiles generally are different, right, we're generally looking at two 0:25:07.320 --> 0:25:09.760 to three year duration profiles. There's a lot of amorization, 0:25:09.840 --> 0:25:11.720 there's a lot of cash flow, it's d risking in 0:25:11.800 --> 0:25:15.720 nature versus five year bullet maturities. So I think you 0:25:15.760 --> 0:25:20.040 add all that up, it's compelling. I think there's still 0:25:20.040 --> 0:25:23.480 a huge education process going on, and so there's certainly 0:25:23.480 --> 0:25:25.679 been some first movers, but we're spending a lot of 0:25:25.680 --> 0:25:29.520 time with LPs are really across the globe and sort 0:25:29.520 --> 0:25:34.199 of helping them understand how the US asset based finance 0:25:34.720 --> 0:25:37.520 sector is emerging. And then it kind of trickles out 0:25:37.520 --> 0:25:38.919 across the globe in different ways. 0:25:39.280 --> 0:25:42.560 Are there various classes of buyers that are sort of emerging. 0:25:42.760 --> 0:25:45.679 Is it family offices, is it insurance companies who've been 0:25:45.720 --> 0:25:48.440 involved for years. You know, banks have obviously been involved, 0:25:49.920 --> 0:25:50.960 sovereign wealth funds. 0:25:51.119 --> 0:25:54.760 Yeah, I think everyone's got a different need, right, So 0:25:55.200 --> 0:25:57.480 going to insurance as an example, we spend a lot 0:25:57.480 --> 0:26:01.840 of time with large insurance companies that have a public 0:26:01.880 --> 0:26:05.720 market presence, right, So they're interacting with the cell side 0:26:05.720 --> 0:26:08.359 every day on ig parts of the capital structure, but 0:26:08.400 --> 0:26:12.680 they maybe haven't built out the team in a way 0:26:12.720 --> 0:26:15.440 that can source the private side, so source underwrite asset 0:26:15.480 --> 0:26:18.919 matters the private side, and so those have been great 0:26:18.960 --> 0:26:24.520 partnerships to develop. I think the you know, the sovereigns 0:26:24.600 --> 0:26:27.960 or the pensions are looking for more absolute return and 0:26:28.040 --> 0:26:30.920 just really kind of a brute force comparison to what 0:26:31.000 --> 0:26:33.080 they're seeing in direct lending, just as sort of the 0:26:33.160 --> 0:26:36.160 natural comp And then I think it's probably an even 0:26:36.240 --> 0:26:39.360 more complicated story to explain to retail, So they're probably 0:26:39.400 --> 0:26:44.560 last on the journey of maybe getting exposure holistically. But 0:26:44.640 --> 0:26:47.680 I think everyone generally, after a few meetings, feels under 0:26:47.720 --> 0:26:50.760 exposed to the asset class when you think about it 0:26:50.880 --> 0:26:53.720 in comparison to the size of the economy, people are 0:26:53.720 --> 0:26:54.879 generally under allocated. 0:26:55.240 --> 0:26:56.879 So if we're talking you know, sort of top of 0:26:56.880 --> 0:26:59.520 the stack, like a triple A security, like what sort 0:26:59.560 --> 0:27:02.560 of a risk dreamium. You know, does the private ABS 0:27:02.600 --> 0:27:04.359 deliver versus a public ABS? 0:27:04.440 --> 0:27:07.920 Just generically yeah, So I mean I think the private 0:27:08.200 --> 0:27:11.360 ABS market doesn't get tranched as much as the public 0:27:11.400 --> 0:27:12.840 So I would think of it as sort of IG 0:27:13.000 --> 0:27:16.679 and non IG risk. We on both sides of that 0:27:16.760 --> 0:27:21.400 coin generally see double the spread of the public market equivalent. 0:27:22.000 --> 0:27:26.640 And that's derived from really three things. One is the liquidity, right, 0:27:26.680 --> 0:27:28.439 so it can't go into some of the homes that 0:27:28.480 --> 0:27:32.800 public securities go, the ETFs, the bond funds, I would say, 0:27:33.359 --> 0:27:37.479 the human complexity of sourcing underwriting it right, you have 0:27:37.520 --> 0:27:40.040 to put the docks together versus by the syndicated bond, 0:27:40.160 --> 0:27:44.200 so you've got to build that infrastructure on the sourcing side. 0:27:44.200 --> 0:27:47.280 And then third is the operational complexity. It's very different 0:27:47.320 --> 0:27:51.880 than direct lending and the fund and it's a horrible 0:27:51.920 --> 0:27:54.399 at maturity in five years. Generally, what we're doing is 0:27:54.720 --> 0:27:58.680 revolving facilities. We're funding our borrow or twice weekly, we're 0:27:58.760 --> 0:28:01.679 checking the covenants, ability criteria, the borrowing base, and so 0:28:01.800 --> 0:28:04.359 you need to build up that operational capability, and so 0:28:04.480 --> 0:28:08.199 for all that put together, you get roughly double the 0:28:08.200 --> 0:28:10.960 public market equivalent across the cycle. 0:28:12.080 --> 0:28:14.080 So in the past couple of years, we've been talking 0:28:14.080 --> 0:28:16.280 a lot about the rise of insurance, which is what 0:28:16.359 --> 0:28:19.359 you were mentioning earlier, and most people kind of mentioned 0:28:19.359 --> 0:28:22.400 always Apollo and the Theme and other like insurance tie 0:28:22.440 --> 0:28:25.840 ups that we've been seeing with asset managers, like Blackstone 0:28:25.840 --> 0:28:28.399 has its own, and like all the large asset managers do. 0:28:29.160 --> 0:28:31.840 What should we expect for like the next twelve months, 0:28:31.840 --> 0:28:34.520 Are we going to continue to see like asset managers 0:28:34.600 --> 0:28:36.760 chase those tie ups or is that kind of like 0:28:36.800 --> 0:28:37.680 played out already. 0:28:38.320 --> 0:28:38.760 No, I don't. 0:28:38.800 --> 0:28:43.040 I don't think anyone's chasing. I think insurance companies would 0:28:43.040 --> 0:28:46.440 probably say they're overweight to corporate credit as well. I 0:28:46.480 --> 0:28:50.560 think they see the risk adjusted returns are compelling in 0:28:50.560 --> 0:28:52.120 the asset base base. I think they're trying to figure 0:28:52.120 --> 0:28:57.760 out how to access it, and so I don't think 0:28:57.800 --> 0:28:59.920 we're near the end of that journey. I think they'll 0:29:00.200 --> 0:29:05.240 continue to be partnerships, whether they're exclusive or not be formed. 0:29:05.280 --> 0:29:06.840 I mean, we I spend a lot of time personally 0:29:06.880 --> 0:29:10.120 with insurance companies and helping them understand our platform and 0:29:10.160 --> 0:29:14.640 how we can compliment what they're maybe doing internally, and 0:29:14.720 --> 0:29:17.040 that's where they're looking to, I would say, expand the 0:29:17.040 --> 0:29:20.000 balance sheet on the private side of the ABS side. 0:29:21.080 --> 0:29:24.120 Also, like I have another question on this. Basically, it's 0:29:24.240 --> 0:29:27.280 very We've seen a lot of asset managers when they 0:29:27.440 --> 0:29:29.840 want to grow in acid based finance, they go out 0:29:29.920 --> 0:29:31.840 and kind of like buy a shop instead of building 0:29:31.920 --> 0:29:34.800 one out, and we've seen a few of this in 0:29:34.880 --> 0:29:40.040 many transactions this year. Do you have any shops in 0:29:40.120 --> 0:29:41.440 mind that do you think like now we're going to 0:29:41.480 --> 0:29:42.920 have to they're going to have to go out and 0:29:43.000 --> 0:29:46.440 buy another asset manager, or we're gonna they're going to 0:29:46.480 --> 0:29:49.320 be hiring, or how competitive is it getting in that space? 0:29:50.040 --> 0:29:51.920 Well, I think we were just on the other side 0:29:51.920 --> 0:29:54.760 of a transaction, right, So you know, I'm happy to 0:29:55.080 --> 0:29:58.920 say we're a year into the TPG transaction, and so 0:29:59.280 --> 0:30:02.400 I recall some of their line of questioning when we 0:30:02.480 --> 0:30:05.520 were we were going through through diligence. So it's a 0:30:05.600 --> 0:30:08.400 space that it takes a long time to penetrate, and 0:30:08.480 --> 0:30:11.200 so I can understand why people are buying it versus 0:30:11.200 --> 0:30:16.240 building it. If you want access to that exposure, organic 0:30:16.400 --> 0:30:18.280 is going to take you a while. So I see 0:30:18.360 --> 0:30:22.680 the the rationale. I can't comment really on what other 0:30:22.720 --> 0:30:25.520 people are thinking, but but I mean we we obviously 0:30:25.560 --> 0:30:28.280 saw a firsthand in terms of our transaction with TPG. 0:30:29.200 --> 0:30:32.400 Yeah, you you you invoke the the TPG transaction. It 0:30:32.480 --> 0:30:36.120 it did happen a year ago. TPG has you know, 0:30:36.240 --> 0:30:39.360 been a pretty significant force across the market, as as 0:30:39.480 --> 0:30:43.840 is Angela Gordon over the years, and it definitely seems 0:30:43.880 --> 0:30:47.360 like a complementary fit between the two. I'm sort of 0:30:47.440 --> 0:30:52.680 interested in what uh what new tools uh TPG may 0:30:52.800 --> 0:30:55.320 bring to your toolkit that you didn't have prior to 0:30:55.400 --> 0:30:56.040 the transaction. 0:30:57.440 --> 0:30:57.640 Yeah. 0:30:57.640 --> 0:31:01.560 I mean they have subject matter expert teas in very 0:31:01.640 --> 0:31:04.440 deeply in certain spaces, and so the one that probably 0:31:05.800 --> 0:31:09.320 is most relevant to my business is in the climate space, right, 0:31:09.360 --> 0:31:14.360 and so they've got a tremendous franchise and their private 0:31:14.360 --> 0:31:17.920 equity business called Rise Climate, and so a lot of 0:31:18.080 --> 0:31:23.960 that infrastructure or even consumer type products actually gets funded 0:31:24.000 --> 0:31:26.480 in the debt market, and you know, tangentially with ABS. So, 0:31:26.520 --> 0:31:29.480 I mean the easiest example is RESI Solar, right, Like 0:31:29.560 --> 0:31:31.320 that's kind of the most generic one I can point to. 0:31:31.480 --> 0:31:35.479 But as things continue to emerge, the fact that our 0:31:35.560 --> 0:31:38.920 investment team on my side can now tap into that 0:31:39.040 --> 0:31:44.920 really subject matter expertise on the technology, on the competitive landscape, 0:31:44.960 --> 0:31:46.560 that's where that's where we've been spending time. 0:31:48.080 --> 0:31:48.200 Now. 0:31:48.480 --> 0:31:51.240 It's interesting bringing up residential solar because and this sort 0:31:51.280 --> 0:31:54.640 of gets back to the change in administrations. The incoming administration, 0:31:54.920 --> 0:31:56.720 I don't know, it just seems like it might be 0:31:56.760 --> 0:32:00.520 a little less interested in supporting climate change and understand it. 0:32:00.600 --> 0:32:05.000 There's a there's you know, fairly significant amount of government 0:32:05.120 --> 0:32:08.000 financial backing that goes into that into that segment. Is 0:32:08.040 --> 0:32:09.840 that the sort of thing where you might see change 0:32:09.840 --> 0:32:10.760 over the next four years. 0:32:11.520 --> 0:32:13.680 Yeah, I mean, listen, there can definitely be change with 0:32:13.880 --> 0:32:17.360 anything that has tax credits or sort of other you know, softer, 0:32:17.560 --> 0:32:22.840 harder regulatory aspects. I mean, I think if people still want, 0:32:23.120 --> 0:32:26.920 you know, solar power, a lot of that is quite 0:32:26.960 --> 0:32:29.840 honestly made in the Red States, right in terms of 0:32:29.840 --> 0:32:33.440 where the jobs are, and so I'd be surprised if 0:32:33.480 --> 0:32:36.240 it's as blunt force as as maybe the rhetoric is. 0:32:37.600 --> 0:32:40.040 So I don't think we're particularly worried about that, but 0:32:41.040 --> 0:32:42.160 we'll see how this plays out. 0:32:43.400 --> 0:32:45.240 I think that's what you were saying TJ about talking 0:32:45.280 --> 0:32:47.320 to the insurance companies and other new types of investors 0:32:47.360 --> 0:32:48.880 about this asset class. How do you talk to them 0:32:48.880 --> 0:32:52.840 about valuing the assets over time and monitoring for stress 0:32:52.960 --> 0:32:57.240 and you know, any particular words on liquidity. I mean, 0:32:57.360 --> 0:32:58.560 do you just tell them you can't try it, you 0:32:58.640 --> 0:33:00.600 go to stuck with it for the next seven years 0:33:00.640 --> 0:33:02.400 and just hold on to it and be happy. 0:33:04.960 --> 0:33:09.120 Well, no, I think people are looking to take advantage 0:33:09.160 --> 0:33:12.840 of the illiquidity premiums, right So. I think most investors 0:33:12.880 --> 0:33:17.120 are going into that eyes wide open. It's not being misallocated, 0:33:17.160 --> 0:33:19.760 if you will, into a liquid vehicle, right so, especially 0:33:19.800 --> 0:33:22.600 the insurance companies, as you mentioned. So, I mean, the 0:33:22.680 --> 0:33:24.760 fact of the matter is is most of these asset 0:33:24.800 --> 0:33:26.920 classes have been around for decades and decades, and there's 0:33:26.920 --> 0:33:31.560 a tremendous amount of performance history to effectively when you're 0:33:31.600 --> 0:33:34.440 underwriting the initial transaction as well as sort of doing 0:33:34.480 --> 0:33:37.280 your asset management work, understanding where. 0:33:37.480 --> 0:33:39.320 The trajectory of the performance is going. 0:33:41.000 --> 0:33:43.400 It's not a surprise if you will like where things 0:33:43.440 --> 0:33:46.280 are today, whether you think they're trending twelve months from now. 0:33:47.400 --> 0:33:48.000 We shouldn't be. 0:33:48.040 --> 0:33:49.640 That far off based on all the tools we have 0:33:49.720 --> 0:33:52.640 available to us. And that's really where sort of the infrastructure, 0:33:52.720 --> 0:33:55.320 the asset management, the analytics come in. And that goes 0:33:55.400 --> 0:33:57.640 back to why we have not seen a tremendous amount 0:33:57.640 --> 0:34:00.160 of competition because you need to build us and it 0:34:00.720 --> 0:34:02.240 costs a lot of money, it takes a lot of time, 0:34:02.840 --> 0:34:05.360 and there's a little bit of an incumbency bias to 0:34:05.560 --> 0:34:08.480 this business versus maybe some other products that are more 0:34:08.560 --> 0:34:09.839 easily accessible. 0:34:10.520 --> 0:34:13.160 So is it safer than in relative terms than direct lending? 0:34:14.040 --> 0:34:15.960 I think the risks are different, right, I think the 0:34:16.080 --> 0:34:18.160 risks are different. We talked about duration, we talked about 0:34:19.280 --> 0:34:22.840 the cash flow profile, we talked about having the assets secured. 0:34:24.400 --> 0:34:26.560 The downside, maybe there's probably more direct lenders than there 0:34:26.560 --> 0:34:29.560 are sypacks finance providers, So in terms of thinking about 0:34:29.560 --> 0:34:34.400 their refinancing risk, you might say that it's better opportunity 0:34:34.400 --> 0:34:37.399 in the direct lending space. But from our seat, when 0:34:37.480 --> 0:34:41.120 we look at our borrowers or counterparts, we have a 0:34:41.280 --> 0:34:44.319 very high recapture rate on those financings. Right, there's less 0:34:44.360 --> 0:34:47.120 competition if both sides are happy there's a high switching 0:34:47.200 --> 0:34:50.320 costs versus direct lending. Meaning we've got the SPV setup, 0:34:50.360 --> 0:34:52.640 we've got the trustees in place, we've got the borrowing base, 0:34:52.680 --> 0:34:56.680 we've got the legal docs. If it's working for both counterparties, 0:34:56.719 --> 0:34:58.439 we generally see pretty hybrid nual rates. 0:34:58.840 --> 0:35:00.840 We should also be able to cut stamize things for 0:35:01.239 --> 0:35:03.920 the buyers as well, right, more so than you know, 0:35:04.000 --> 0:35:05.880 sort of just direct lending would. 0:35:06.160 --> 0:35:08.759 Yeah, correct, I mean it's it's still highly covenanted, right, 0:35:08.880 --> 0:35:10.680 Like it's different than direct lending, where I think it's 0:35:10.719 --> 0:35:14.480 a multiple and a and a spread function largely driving. 0:35:14.520 --> 0:35:17.400 And I think it's about eligibility criteria, it's about flexibility. 0:35:17.800 --> 0:35:19.960 Those are things that are important to these specialty finance 0:35:20.000 --> 0:35:22.760 companies much more so than just what's the raw spread? 0:35:23.160 --> 0:35:26.040 Right? How big is the investable opportunity? 0:35:27.000 --> 0:35:29.839 Yeah, the million dollar question. Listen, I think we can 0:35:30.080 --> 0:35:32.320 we can easily kind of get to a seven potentially 0:35:32.320 --> 0:35:34.680 in a dollar market. I know there's numbers flying around 0:35:35.480 --> 0:35:39.520 multiples of that. Yeah, regardless, it's a giant, gigantic opportunity. 0:35:39.640 --> 0:35:43.480 And you know, we're very busy, right to say the least. 0:35:43.800 --> 0:35:46.960 Because the forty trillion number that other estimates just throughout 0:35:46.960 --> 0:35:51.040 what also including infrastructure, energy like other asse of classes. 0:35:51.120 --> 0:35:53.160 Right, Yeah, I mean we always say private credit is 0:35:53.239 --> 0:35:55.799 very loosely defined, So I mean you can you can 0:35:55.840 --> 0:35:57.719 add a whole bunch of ingredients and get to a 0:35:57.760 --> 0:35:58.319 bigger number. 0:35:59.200 --> 0:36:02.920 You've told about more beage finance and also equipment finance offline. 0:36:03.400 --> 0:36:06.719 Can you talk about a bit more about the opportunity then, Well. 0:36:06.600 --> 0:36:08.960 I mean, equipment finance is a space that's kind of 0:36:09.040 --> 0:36:11.360 core to again, kind of the main street economy. 0:36:11.520 --> 0:36:11.640 Right. 0:36:11.800 --> 0:36:14.400 It's been a space that has been dominated by the 0:36:14.440 --> 0:36:18.440 regional banks, and so even an interested investor from the 0:36:18.480 --> 0:36:21.160 private credit side has had a very hard time accessing it. 0:36:21.560 --> 0:36:24.239 That changed in twenty twenty three, and so we've spent 0:36:24.360 --> 0:36:28.520 the last twelve months or so really you know, interviewing counterparties, 0:36:28.520 --> 0:36:31.600 whether they be banks or non bank originators, and figuring 0:36:31.640 --> 0:36:34.520 out how to plug that gap where that borrow or 0:36:34.640 --> 0:36:37.400 that finance, that that financing need was traditionally going to 0:36:37.440 --> 0:36:40.280 regional bank one two three, They can't fulfill that anymore. 0:36:41.239 --> 0:36:43.400 The business is still good, the equipment is still the equipment, 0:36:43.840 --> 0:36:46.440 and so that's a space that we think is in 0:36:46.520 --> 0:36:48.920 the very kind of early intings of transitioning into more 0:36:49.000 --> 0:36:54.719 of a stable private credit subsector. On mortgage finance, that 0:36:54.960 --> 0:36:57.560 is a space where the interest rate move has had 0:36:57.600 --> 0:37:02.520 a profound effect on volumes and how the consumer or 0:37:02.600 --> 0:37:05.680 the borrower utilizes it. And so you know, you sit 0:37:05.760 --> 0:37:07.880 here today and the US is unique and with this 0:37:08.000 --> 0:37:13.279 thirty year fixed rate mortgage product where borrowers have effectively 0:37:13.320 --> 0:37:15.680 locked in their lowest the lowest rate they can get 0:37:15.719 --> 0:37:18.239 on their largest obligation. And that's a good thing, right, 0:37:19.960 --> 0:37:23.080 But now you see someone that's been in their house 0:37:23.160 --> 0:37:24.920 for seven eight years with a three and a half 0:37:24.920 --> 0:37:27.800 percent mortgage saying, you know, I've got hundreds of thousand 0:37:27.800 --> 0:37:28.800 dollars of home equity. 0:37:28.840 --> 0:37:30.279 How do I access that? 0:37:30.520 --> 0:37:33.359 Traditionally you would refinance your firstly and take some cash out. 0:37:33.960 --> 0:37:36.000 That math doesn't make any sense today, and so we're 0:37:36.040 --> 0:37:41.160 seeing the evolution of home equity products. Again, we think 0:37:41.239 --> 0:37:44.400 the credit is pristine at this point. So that's a 0:37:44.440 --> 0:37:48.800 space where we're looking to get deployed quickly. We know 0:37:48.920 --> 0:37:52.440 credit standers can loosen over time as more people, you know, 0:37:53.080 --> 0:37:55.040 look for that opportunity, and so that's a space that 0:37:56.719 --> 0:37:58.920 you know, we expect there could be one hundred and 0:37:58.960 --> 0:38:01.759 fifty to twohentred million of origination per year with a 0:38:02.360 --> 0:38:05.239 call it two trillion dollar really a dressable market there 0:38:05.320 --> 0:38:09.080 on the he looks helocks or secondly as yeah, yeah, okay, So. 0:38:09.440 --> 0:38:11.520 Rates go up, rates go down. I look at the 0:38:11.680 --> 0:38:14.640 the BDCs also on the credit side, and it seems 0:38:14.640 --> 0:38:17.200 to be a double edged sword, at least for business 0:38:17.239 --> 0:38:20.640 development companies. If rates go up, it puts a little 0:38:20.640 --> 0:38:23.600 bit more stress on the borrowers, but it also creates 0:38:23.840 --> 0:38:25.720 you know, more of a I guess of a spread 0:38:25.719 --> 0:38:28.239 opportunity for the for the lender. Rates go down, less 0:38:28.239 --> 0:38:30.960 stress on the borrow but maybe maybe you know, sort 0:38:30.960 --> 0:38:34.160 of less less margin to be had there. How does 0:38:34.200 --> 0:38:36.359 that operate in your business? So I think we're looking 0:38:36.400 --> 0:38:41.000 at probably the consensus points towards about three rate cuts 0:38:41.040 --> 0:38:43.640 over the next twelve months. It's been as high as 0:38:43.680 --> 0:38:45.520 six or seven, you know if you look back a 0:38:45.560 --> 0:38:49.560 few months. So rates go down, three rate cuts next 0:38:49.560 --> 0:38:51.520 twelve months. How does that work in your business? 0:38:53.480 --> 0:38:57.000 I think it's it's less impactful than it is on 0:38:57.040 --> 0:38:57.680 the corporate side. 0:38:57.680 --> 0:38:58.600 I think I think. 0:39:00.200 --> 0:39:03.439 The duration of the product therefore leads to I would 0:39:03.440 --> 0:39:06.279 say more natural resetting. There aren't these big cliff or 0:39:06.320 --> 0:39:08.480 wall events where you're gonna have a whole bunch of 0:39:08.680 --> 0:39:13.560 low cost ig credit from twenty twenty one rollover, Right, 0:39:13.760 --> 0:39:16.239 So most of what we're doing is lending on a 0:39:16.280 --> 0:39:19.360 floating rate basis to these specially financed companies. They're adjusting 0:39:20.480 --> 0:39:24.280 their return on assets, right, So they're what they're charging 0:39:24.320 --> 0:39:26.960 to their consumer moves kind of in tandem, and it's 0:39:27.000 --> 0:39:28.400 resetting really on a daily basis. 0:39:28.480 --> 0:39:28.600 Right. 0:39:28.640 --> 0:39:32.080 So if you're an auto finance company and the FED 0:39:32.200 --> 0:39:34.320 cuts or it doesn't cut, you can kind of naturally 0:39:34.360 --> 0:39:37.719 think of twenty five basis points and rate being passed on. 0:39:38.040 --> 0:39:40.600 So there's not as much of this kind of built 0:39:40.719 --> 0:39:46.040 up a mismatch, if you will. I think I don't 0:39:46.080 --> 0:39:49.760 foresee rates causing a lot of stress in this market. 0:39:49.840 --> 0:39:52.719 I think that really occurred in twenty twenty two and 0:39:52.800 --> 0:39:55.200 there was a giant reset of both rates and spread, 0:39:55.920 --> 0:39:59.080 and I think companies were stress tested then. 0:39:59.160 --> 0:40:00.920 I think things are more on balance today. 0:40:01.840 --> 0:40:04.240 Yeah, they certainly were. Five hundred and twenty five basis 0:40:04.280 --> 0:40:07.840 point increase in base rates and then increase risk premiums 0:40:07.840 --> 0:40:10.720 on top of that was some discombobulation of the banking 0:40:11.600 --> 0:40:14.640 market made for an interesting environment. I think it's actually 0:40:14.680 --> 0:40:21.640 pretty remarkable how well credit managed through all of those changes. 0:40:23.400 --> 0:40:26.319 I mean, listen, it didn't feel great in the second 0:40:26.400 --> 0:40:29.520 or third quarter of twenty two, but you know, most 0:40:29.520 --> 0:40:31.439 people got to the other side. Whether you know, again, 0:40:31.480 --> 0:40:33.000 it was more of a it was more of the 0:40:33.120 --> 0:40:36.840 issuers problem than it was so much the investors problem. 0:40:36.920 --> 0:40:39.160 The investors could kind of patiently wait and see how 0:40:39.200 --> 0:40:42.200 this shakes out. The issuers were the ones that had 0:40:42.360 --> 0:40:46.800 liquidity needs. They were kind of the four sellers of 0:40:46.840 --> 0:40:49.280 twenty twenty two. It wasn't the owners of the bonds. 0:40:49.360 --> 0:40:51.839 It was actually the owners of the loans that needed 0:40:51.880 --> 0:40:55.920 to turn over their facilities, and so you know, it 0:40:56.080 --> 0:40:59.400 wasn't a productive P and L environment for them. But 0:40:59.440 --> 0:41:00.960 to your point, made it to the other side. And 0:41:01.360 --> 0:41:04.840 now I think those companies have sort of reset and 0:41:04.880 --> 0:41:06.880 they've Again that goes back to why there's more demand 0:41:07.000 --> 0:41:10.000 for private credit, because if some of those companies had 0:41:10.600 --> 0:41:15.440 fifty percent of their production already determined to go to counterparty, 0:41:15.480 --> 0:41:18.560 why regardless of where triple A spreads were, they would 0:41:18.560 --> 0:41:20.359 have an easier process getting through twenty twenty two than 0:41:20.360 --> 0:41:21.000 they otherwise did. 0:41:21.200 --> 0:41:21.719 Yeah, yep. 0:41:22.320 --> 0:41:24.839 One thing we've seen on the public side in terms 0:41:24.840 --> 0:41:28.000 of credit spreads, you know, they're incredibly tight, you know, 0:41:28.280 --> 0:41:31.840 decades long loads in terms of you know, IG and 0:41:31.880 --> 0:41:35.600 high yield, and parts of that has been due to 0:41:35.640 --> 0:41:37.560 the fact that supply has been taken out by the 0:41:37.600 --> 0:41:40.960 private markets. To what extent does that happen in asset 0:41:41.320 --> 0:41:43.960 backed markets and how will that affect pricing? 0:41:45.520 --> 0:41:46.640 That's a good question. I think. 0:41:47.080 --> 0:41:50.759 I think the preferred method of funding will still be 0:41:50.840 --> 0:41:53.160 the public markets, just from a cost perspective. I think 0:41:53.239 --> 0:41:56.480 of the private markets as either the means to the end, 0:41:56.880 --> 0:42:00.680 meaning so we're giving that bridging or where house capacity 0:42:00.760 --> 0:42:02.319 to get to that public markets, and so that will 0:42:02.360 --> 0:42:05.960 always be necessary capital. But I don't see many specially 0:42:06.000 --> 0:42:09.560 finance companies completely going to private funding based on where 0:42:09.800 --> 0:42:12.640 the opportunity or where they're funding opportunities are today. So 0:42:13.200 --> 0:42:16.000 it's much more balanced. I think, you know, where we 0:42:16.239 --> 0:42:19.840 set is we're really playing across public and private markets, 0:42:21.600 --> 0:42:25.360 and so that also provides some of our counterparties, we 0:42:25.480 --> 0:42:27.480 provide them more utility than if we were just in 0:42:27.560 --> 0:42:30.160 the public markets or just in the private markets. And 0:42:30.600 --> 0:42:32.920 that's also sort of a sourcing advantage when we think 0:42:32.960 --> 0:42:33.600 about our business. 0:42:34.000 --> 0:42:37.360 Okay, there's probably some listeners out there thinking, you know, 0:42:37.520 --> 0:42:42.360 securitization at the highest levels since the global financial crisis 0:42:42.920 --> 0:42:45.200 and then all of it being bundled up and into 0:42:45.280 --> 0:42:48.680 private hands where you can't see what's going on, sets 0:42:48.680 --> 0:42:50.759 off a few alarm bells, particularly if you're old like 0:42:50.920 --> 0:42:54.800 me and remember the last market catastrophes. What are we 0:42:54.880 --> 0:42:56.840 doing differently this time? Why are we're not going to 0:42:56.880 --> 0:42:58.840 get into the same kind of trouble as we did 0:42:58.960 --> 0:42:59.319 last time? 0:43:00.440 --> 0:43:02.799 Well, I mean, listen, I think the fact that it's 0:43:02.840 --> 0:43:06.960 going to I would tell you private transactions are generally 0:43:07.680 --> 0:43:14.240 pretty discerning in terms of the eligibility criteria, the traps 0:43:14.239 --> 0:43:16.360 if you will, to cut things off if they are 0:43:16.440 --> 0:43:18.640 going bad, and more so than what would be a 0:43:19.000 --> 0:43:23.000 traditional static pool securitization. So the more capital that goes 0:43:23.040 --> 0:43:26.000 into private markets actually probably means there's more control and risk. 0:43:26.680 --> 0:43:27.440 Listen. I think. 0:43:28.840 --> 0:43:31.879 Whether it's the rating agencies or whether it's the sophistication 0:43:32.120 --> 0:43:35.400 of the actual bond buyers versus two thousand and eight, 0:43:35.480 --> 0:43:38.840 I think the whole game has changed and evolved. But 0:43:39.760 --> 0:43:41.640 at the end of the day, I don't think there's 0:43:42.000 --> 0:43:45.279 new credit being created, it's the geography of where that 0:43:45.360 --> 0:43:48.239 credit is. So again, we've talked a lot about the 0:43:48.320 --> 0:43:50.640 auto loans used to live on the regional bank balance sheet. 0:43:51.640 --> 0:43:54.520 That person still needs the auto loan, the car still 0:43:54.560 --> 0:43:57.520 exists as the collateral. It's not being created in thin air. 0:43:57.640 --> 0:44:00.400 So now that it's being funded in the securitization market 0:44:00.560 --> 0:44:04.520 versus the regional bank, that doesn't mean there's sort of access. 0:44:04.600 --> 0:44:07.279 It's just the geography of the funding that's the theme 0:44:07.360 --> 0:44:08.640 of I think twenty twenty three. 0:44:08.920 --> 0:44:11.279 Seems to be a lot less leverage in the system too, 0:44:11.440 --> 0:44:16.160 and less financial weapons of mass destruction in the form 0:44:16.200 --> 0:44:16.920 of CDs. 0:44:17.040 --> 0:44:19.560 Yeah, I was gonna say exactly, like CDs and CDOs 0:44:19.560 --> 0:44:22.160 are no longer a tool. 0:44:22.000 --> 0:44:23.640 To put leverage on leverage, right. 0:44:24.800 --> 0:44:27.640 A lot of that was, you know, manufactured triple a 0:44:27.800 --> 0:44:32.239 risk that I just I don't think whatever fly knowing 0:44:32.320 --> 0:44:33.400 what we know today, but. 0:44:33.440 --> 0:44:36.560 We all still see some signs of synthetic leverage coming up, right, 0:44:36.600 --> 0:44:38.840 I mean, there are some signs out there that you know, 0:44:39.160 --> 0:44:41.560 there is a bit more froth in the muket. 0:44:41.920 --> 0:44:44.480 Well, I mean, if you're talking about the SRT space, 0:44:44.520 --> 0:44:47.160 I mean that's actually the inverse of what happened in 0:44:47.200 --> 0:44:51.120 the GFC. The GFC, the goal was created as much 0:44:51.200 --> 0:44:55.960 triple A cheap financing as possible and export that. I 0:44:56.040 --> 0:44:58.879 think you see now the big banks sort of get 0:44:58.960 --> 0:45:02.439 capital relief throughout, but they still own the assets, they're 0:45:02.440 --> 0:45:05.919 still funding it. It's not necessarily being exported the way. 0:45:05.800 --> 0:45:06.279 It used to be. 0:45:07.040 --> 0:45:08.799 And if you think about everything, you're doing everything, you're 0:45:08.800 --> 0:45:11.000 looking at what's the best relative value, where's the best 0:45:11.040 --> 0:45:12.319 opportunity right now? In credit? 0:45:13.200 --> 0:45:17.120 Well, again, from a deployment perspective, we think lending is 0:45:17.239 --> 0:45:20.359 much better than owning, generally speaking, because there's less people 0:45:20.400 --> 0:45:23.640 that are built to do it. From an asset perspective, 0:45:23.680 --> 0:45:26.680 I think we're focused on housing, we're focused on residential 0:45:26.760 --> 0:45:31.840 real estate. We're generally undersupplied, and so these kind of 0:45:31.880 --> 0:45:35.960 emerging home equity products, if you will, seem very compelling 0:45:36.040 --> 0:45:38.240 right now because if you think about what you just asked, 0:45:38.400 --> 0:45:41.160 the amount of regulation that went into residential mortgages Posts 0:45:41.200 --> 0:45:44.560 two thousand and eight has led to really pristine credit 0:45:44.680 --> 0:45:49.040 quality even fifteen years later, and so I think that 0:45:49.280 --> 0:45:52.640 is the place, if you will, to look for high 0:45:52.680 --> 0:45:55.319 quality assets, even if the spreads are not what they 0:45:55.360 --> 0:45:57.120 once were, you know Twelvey eighteen months ago. 0:45:57.640 --> 0:46:00.080 Great stuff. TJ. Duck and Head of Structured Credit and 0:46:00.160 --> 0:46:03.080 Specialty Finance at TPG, Angelo Gordon, It's been a pleasure 0:46:03.120 --> 0:46:05.800 having you on the Credit Edge, Thanks guys, and of 0:46:05.840 --> 0:46:08.320 course we're very grateful to David Havenes from Bloomberg Intelligence. 0:46:08.320 --> 0:46:09.600 Thanks for much for joining us today. 0:46:09.640 --> 0:46:09.799 Yep. 0:46:09.880 --> 0:46:10.680 Great being with you all. 0:46:10.880 --> 0:46:13.600 And to Carmen Arroyo with Bloomberg News milgratias. 0:46:13.880 --> 0:46:14.239 Thank you. 0:46:15.120 --> 0:46:17.480 Please do follow Carmen on Bloomberg dot com and the 0:46:17.520 --> 0:46:20.360 Bloomberg Terminal, and for more credit market analysis and insight 0:46:20.440 --> 0:46:22.920 read all of David Havens's great work on the terminal. 0:46:23.120 --> 0:46:25.719 Bloomberg Intelligence is part of our research department, with five 0:46:25.840 --> 0:46:29.480 hundred analysts and strategists working across all markets. Coverage includes 0:46:29.480 --> 0:46:32.400 over two thousand equities and credits and outlooks on more 0:46:32.440 --> 0:46:36.759 than ninety industries and one hundred market indices, currencies and commodities. 0:46:37.200 --> 0:46:39.160 Please do subscribe to the Credit Edge wherever you get 0:46:39.200 --> 0:46:41.879 your podcasts. We're on Apples, Spotify and all other good 0:46:41.920 --> 0:46:46.160 podcast providers, including the Bloomberg Terminal at bpod Go. Give 0:46:46.239 --> 0:46:48.480 us a review, tell your friends, or email me directly 0:46:48.560 --> 0:46:52.240 at Jcromby eight at Bloomberg dot net. I'm James Cromby. 0:46:52.280 --> 0:46:54.239 It's been a pleasure having you join us again next 0:46:54.280 --> 0:46:55.600 week on the Credit Edge.