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Speaker 1: Hello, and welcome to the Credit Edge, a weekly markets podcast.

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Speaker 1: My name is James Crumby. I'm a senior editor at Bloomberg.

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Speaker 2: And I'm Steve Lunn, a senior credit analyst with Bloomberg Intelligence.

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Speaker 2: This week, we're very pleased to welcome Mike Best, who

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Speaker 2: runs the senior secured loan and multi ASSEID credit strategies

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Speaker 2: at Barings.

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Speaker 3: How are you, Mike? Doing well? Thank you?

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Speaker 2: Mikes a member of Barrings US high Field Investments Group

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Speaker 2: responsible for portfolio management for senior secured loan and multi

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Speaker 2: ASCID credit strategies. Mike has been in the leverage credit

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Speaker 2: business since two thousand and three, and prior to Barings,

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Speaker 2: he was in the leverage finance group at Bank of America.

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Speaker 1: Great to see Mike and leverage finance, that's our favorite topic.

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Speaker 1: Just to get the bull rolling credit markets looking a

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Speaker 1: bit can place at this point, with debt spreads back

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Speaker 1: below long term averages and most likely to go tighter

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Speaker 1: as demand for yield rises and net new supply of

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Speaker 1: corporate bonds and loans is capped unless there's a big

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Speaker 1: m and a comeback. Public credit markets are performing well,

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Speaker 1: leading some to question the value proposition of private markets,

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Speaker 1: and most people sound quite confident about the resilience of

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Speaker 1: corporate balance sheets. The end of American exceptionalism is a

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Speaker 1: big theme. Global investors say they're looking more at Europe

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Speaker 1: and Asia as alternatives, but there are clear limitations when

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Speaker 1: it comes to scale and liquidity there. Over All, though,

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Speaker 1: there's a huge amount of uncertainty and headline risks, not

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Speaker 1: just on tariffs, but also around the budget deficit, inflation,

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Speaker 1: the Fed's next move, taxes, immigration reform, and global geopolitics. So, Mike,

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Speaker 1: what's your take? Is credit risk fairly valued at these levels?

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Speaker 1: Do you think where do we go from here?

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Speaker 3: Yeah, it's a difficult time when you just if you

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Speaker 3: solely look at spreads right now in the markets, you

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Speaker 3: might think, you know, certainly that there's a lot of

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Speaker 3: complacency in the market. I think the market's been remarkably firm,

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Speaker 3: you know, despite all of the geoplical headlines we've thrown

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Speaker 3: at it, the economic headlines we've thrown at it. Indexes

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Speaker 3: sort of shrug everything off, and you know, you look

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Speaker 3: at obviously the most recent bit of news over the

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Speaker 3: weekend with with missiles and bombs being exchanged between you

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Speaker 3: know over in the Middle East, in Iran, and that

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Speaker 3: certainly should have you know, theoretically spiked some level of

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Speaker 3: spreads and equities should have traded off, and the market

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Speaker 3: shrugging those things off. I do think at the margin,

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Speaker 3: you know, when you look underlying some of the data,

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Speaker 3: there are spots where people are reacting to the news flow.

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Speaker 3: There are people, there are spots where investors are looking

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Speaker 3: at you know, more risk in those sectors and are

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Speaker 3: pricing that in. And you know, some high level examples

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Speaker 3: are you know, for example, retail bonds, chemical leverage, loans

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Speaker 3: this year, consumer products as well as another sector where

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Speaker 3: those those sectors are underperforming. There's a lot of wide

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Speaker 3: spreads on offer in those sectors. But you know, investors

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Speaker 3: are being quite cautious right now, and I think they have,

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Speaker 3: you know, sort of all the hallmarks of places where

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Speaker 3: people are looking with some level of concern right now.

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Speaker 2: So is retail in the sector that you're most worried about.

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Speaker 3: I think it's retail and the consumer and I put

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Speaker 3: them together because it's not just pure retailers where you know,

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Speaker 3: you know, there are a lot of quality names within

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Speaker 3: the retail sector where I'm not too concerned about their

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Speaker 3: ability to repay their debt on time, make coupon payments,

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Speaker 3: invest in the business to stay competitive, which is a

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Speaker 3: key theme in retail. On the other end of the

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Speaker 3: bar bell, you do have a lot of places within

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Speaker 3: the retail sector where you know, it's a challenge, right

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Speaker 3: You've got, you know, changing ways that consumers are purchasing

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Speaker 3: their goods. You've got some very leverage balance sheets in

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Speaker 3: that sector, and those are spots where where we do

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Speaker 3: have a lot of concern. But I think the consumer

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Speaker 3: more broadly is a concern, and that's where you think

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Speaker 3: about it from a perspective of household balance sheets have

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Speaker 3: been in remarkably good shape and kept the spending going

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Speaker 3: for the last few years, but at some level inflation

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Speaker 3: starts to bite. Rates have not fallen, so the affordability

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Speaker 3: of housing starts to become an issue the household. You know,

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Speaker 3: the household calculus can only work but so well when

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Speaker 3: wages are not at a rising at a rapid clip.

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Speaker 3: And so the automotive sector, the housing sector, these are

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Speaker 3: all consumer products sectors. To some degree. It's just a

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Speaker 3: question of, you know, how acutely they bite. So I

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Speaker 3: think we're concerned about all the consumer related sectors. We

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Speaker 3: have less concern if you will, on the industrial sectors particularly,

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Speaker 3: you know, when you think about utilities, when you think

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Speaker 3: about some of the investment that is going into AI

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Speaker 3: infrastructure is certainly thematic and everybody wants to talk about

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Speaker 3: it all the time, but there are I think there

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Speaker 3: is going to be a lot of capital investment that's

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Speaker 3: going to go into those sectors and that will provide

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Speaker 3: some tailwind for them, much more so than the consumer

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Speaker 3: can weather. Right now, no word about the consumer.

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Speaker 2: What's interesting is the jobs of actually help out relatively well.

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Speaker 2: Right So, I guess what happens if that was to

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Speaker 2: roll over, that would be a big fear that's probably

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Speaker 2: not price in the market today.

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Speaker 3: I think you're right. I think it's you know, certainly,

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Speaker 3: you know, I think that the from a macroeconomic perspective,

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Speaker 3: certainly that is not priced into the market that we're

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Speaker 3: going to see a big rising unemployment rate or anything

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Speaker 3: along those lines. Obviously, that is the one spot in

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Speaker 3: the one lever the FED can pull. If they see

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Speaker 3: start to see that rollover, that does give them, you know,

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Speaker 3: they can take a little bit of pressure off the

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Speaker 3: economy from a macro perspective with rates, because what's sort

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Speaker 3: of holding them in right now is the employment sector

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Speaker 3: is remarkably resilient, Inflation is quite high, and obviously Chairman

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Speaker 3: Pal doesn't have a lot of places he can go

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Speaker 3: in that type of environment. So there is a little

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Speaker 3: bit of a relief valve if we see some level

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Speaker 3: of softness there. But you know, it's certainly I think

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Speaker 3: it's going to be a choppy ride getting from point

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Speaker 3: A to point.

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Speaker 1: B on consumer credit. And I've fel like we've been

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Speaker 1: talking about that for years and the strain that that

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Speaker 1: sector has been under, but the amounts of actual distress.

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Speaker 1: You know, there has been some bankruptcy, there has been

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Speaker 1: some default, but not a huge amount. And those have

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Speaker 1: been sort of smaller companies that are maybe more leveraged

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Speaker 1: that we've kind of known about. They've been in trouble,

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Speaker 1: they got some cheap money during COVID and they survived

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Speaker 1: a bit longer then now they're hitting the wall. How

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Speaker 1: far does it go though? Is it is it widespread?

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Speaker 1: Is it is it all over the map, or what

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Speaker 1: kind of winners and losers within consumer can you see?

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Speaker 3: Yeah, well, I think that you know, you're certainly your

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Speaker 3: point is quite well taken that I think a lot

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Speaker 3: of people have been concerned about the consumer for quite

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Speaker 3: some time. I think that there are and continue to be,

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Speaker 3: some you know, haves and have nots. And when you

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Speaker 3: look at spread dispersion, for example, within some of these markets,

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Speaker 3: you do see a lot of things on the very

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Speaker 3: wide end that are obvious default candidates and they're going

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Speaker 3: to become bankruptcies here in the near future, and some

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Speaker 3: of them have recently become so. But I do think what,

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Speaker 3: you know, what you you mix that with is a

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Speaker 3: lot of these products consumer products businesses. They do have

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Speaker 3: maturities coming up. They do have some things that they

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Speaker 3: need to navigate, and when you run out of you know,

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Speaker 3: it's hard to kill a retailer, but when they die,

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Speaker 3: they die very quickly. You know. From my perspective, as

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Speaker 3: I look at that, it's going to be very tough

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Speaker 3: for some of these guys to refinance refinance their debt.

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Speaker 3: That means it may maybe a slower bleed out, but

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Speaker 3: it will take some time and it will sort of

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Speaker 3: appear there. In our opinion, is.

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Speaker 1: It mostly smaller companies. I mean, I just looked at

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Speaker 1: the kind of dispersion everyone keeps talking about, and it

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Speaker 1: seems that the smaller companies are underperforming and the larger

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Speaker 1: balance sheets, you know, they're more liquid, they've got more buffer,

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Speaker 1: they've got more ability to maybe past some of these

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Speaker 1: costs on they you know, is that where the biases

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Speaker 1: in terms of defensive stuff in this sector, the bigger companies.

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Speaker 3: I think that's certainly the bias. It certainly helps. Obviously,

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Speaker 3: size and scale always help. Just if you think about

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Speaker 3: a retailer being a small retailer, there's a lot of

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Speaker 3: things you need to be doing right in order to

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Speaker 3: you know, reach your customers and do things. But look,

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Speaker 3: there are large businesses that exist in the leverage finance

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Speaker 3: market that are large retailers, that are name brand retailers

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Speaker 3: that have you know, locations that all of us have

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Speaker 3: probably been to, even you know given up in New

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Speaker 3: York City for example, And you know, those companies are

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Speaker 3: struggling as well and have the potential to struggle a

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Speaker 3: lot in this kind of an environment. And so you know,

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Speaker 3: from our perspective, it may take some time, but it's

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Speaker 3: not necessarily just going to be the small niche retail

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Speaker 3: consumer products company who's you know, for lack of a

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Speaker 3: better term, their buggy whip is no longer needed. It's

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Speaker 3: going to be you know, it can be possibly much

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Speaker 3: more widespread to sort of general retailers and things of

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Speaker 3: that nature.

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Speaker 2: So in your seat, you do you've spent a lot

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Speaker 2: of time both, it sounds like, in the loan and

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Speaker 2: the high old bomb markets. So when looking at leverage

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Speaker 2: loans versus high held bonds, what do you think about

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Speaker 2: the re releative value dynamic between those two assa classes.

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Speaker 2: Obviously they're related, right, A lot of comple these are

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Speaker 2: in both markets. But what are you seeing out there

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Speaker 2: as far as relative value and leven loan versus highal bonds?

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Speaker 3: Yeah, absolutely, and I think it's you know, statistics are

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Speaker 3: one thing, and you can look at the oas d

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Speaker 3: M ratio of the indexes and things like that and

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Speaker 3: sort of draw some conclusions. But I think very broadly speaking,

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Speaker 3: you know, the high yield bond market is about fifty

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Speaker 3: five percent double be rated, and it's a much higher

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Speaker 3: quality market than the leverage loan market, where that is

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Speaker 3: about sixty seven percent single be rated. Predominantly sponsored driven

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Speaker 3: companies that are you know, looking to generate higher returns

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Speaker 3: to the equity investors there, and so you do need

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Speaker 3: to account for differences in just credit quality, sheer credit quality.

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Speaker 3: And when you look at it, over the last several years,

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Speaker 3: last three or four years, we've been as wide as

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Speaker 3: getting an extra two hundred and fifty to three hundred

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Speaker 3: basis points of extra spread to be in the loan

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Speaker 3: market versus the bond market, and we've been as tight

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Speaker 3: as you know, sort of one hundred basis points, give

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Speaker 3: or take. And that one hundred basis points level to

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Speaker 3: me is which is about where we are right now today,

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Speaker 3: especially when you exclude the distressed portion of the US

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Speaker 3: leverage loan market, which I think is its own animal

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Speaker 3: and deserves, you know, probably its own podcast, frankly. But

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Speaker 3: when you exclude those things, you're really down to that

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Speaker 3: hundred basis points level, and that's when you're getting, in

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Speaker 3: my opinion and in our opinion, it's a coin toss

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Speaker 3: between the two right now in terms of spread returns

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Speaker 3: for the next few years on a risk adjusted basis,

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Speaker 3: if all else is equal, and obviously spreads, you know, rally,

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Speaker 3: we're in a risk on market for a lot longer,

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Speaker 3: holding on to carry for dear life, and it is

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Speaker 3: a strategy to win. But I think as you sort

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Speaker 3: of think a step back and try to put your

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Speaker 3: macroeconomic hat on, there's a lot of directions. You know,

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Speaker 3: the tails are fat, there's a lot of directions in

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Speaker 3: which these markets can go and preserving sort of that

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Speaker 3: maximum amount of flexibility. There is really war weird positioned

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Speaker 3: right now and we're how we're looking at the market.

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Speaker 1: How much of rates view comes into that, given you know,

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Speaker 1: loans is floating and and everyone's hoping that the FED

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Speaker 1: might start cutting soon.

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Speaker 3: Yeah, I think to some degree, rates is a portion

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Speaker 3: of that. I think at Bearings we try to be

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Speaker 3: you know, a credit shop first and foremost that focuses

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Speaker 3: on sort of you know, relative spreads, relative value of

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Speaker 3: all of our underlying credits. And I will you know,

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Speaker 3: I won't say that we ignore rates, but we certainly

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Speaker 3: don't want to be making big macroeconomic rape bets ats

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Speaker 3: a firm, but to us, I think it is much more.

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Speaker 3: We did spend a lot of call it twenty two,

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Speaker 3: twenty three, twenty four with a with a very strong

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Speaker 3: bias to being overweight floating rates. We didn't see any

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Speaker 3: paths to the FED to be cutting and so you know,

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Speaker 3: keep calm and carry on. Kind of kind of market

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Speaker 3: was was the theme for a while. I think right now,

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Speaker 3: as we look at it, we do see that that

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Speaker 3: rates are a natural buffer if we hit a downturn,

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Speaker 3: and you know, break evens are certainly much more at

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Speaker 3: attractive now than they've ever been. Hypothetically, if you want

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Speaker 3: to say that high yield market isn't attractive in an

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Speaker 3: off market until it's at ten percent, well, guess what,

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Speaker 3: You're going to get some level of spread widening. But

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Speaker 3: you're also a market in which high yield trades at

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Speaker 3: ten percent. Guess what, rates are also going down as well.

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Speaker 3: So those break evens look a lot more compelling now

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Speaker 3: in fixed income, in non floating rate assets. So it

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Speaker 3: is a much more of a coin toss. But I

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Speaker 3: don't think we're willing to make a call that rates

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Speaker 3: are going to come crashing in anytime soon.

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Speaker 1: And then the third leg of the whole equation is

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Speaker 1: private credit, you know, which is increasingly converging with leverage loans.

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Speaker 1: How does that factor into your relative value?

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Speaker 3: Yeah, certainly, I think you know, obviously I sit on

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Speaker 3: the public credit side here at bearings, but we do

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Speaker 3: an increasingly our investor base. We predominantly manage institutional investments,

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Speaker 3: and institutional investors I think are certainly well attuned and

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Speaker 3: understanding of differences between public and private credit, but also

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Speaker 3: the gray area that exists between those two markets, which

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Speaker 3: is I think where you know, to some degree, there

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Speaker 3: are some investors who are still very much looking at

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Speaker 3: this as credit as credit and I just want you

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Speaker 3: to find me the best relative value and at bearings.

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Speaker 3: We've sort of positioned ourselves to be very cross functional

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Speaker 3: with our private credit group, with our with our public

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Speaker 3: credit group, but I do think there will be over

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Speaker 3: time more convergence between those two sectors. We see more

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Speaker 3: their companies outgrowing their market to some degree and coming

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Speaker 3: up into our market. And we've certainly seen I think

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Speaker 3: a decent amount of chipping away. You know, for example,

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Speaker 3: in the credits we Seleverage Loan Index, which is our

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Speaker 3: UBS Leverage Loan Index. Now, you know a lot of

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Speaker 3: the smaller companies are gone from that index. They've moved

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Speaker 3: on into being private credit issuers. You know, when I started,

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Speaker 3: it was it was sort of nothing to think about

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Speaker 3: having a four hundred million dollar term loan b that

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Speaker 3: was placed amongst you know, ten to fifteen lend and

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Speaker 3: that was considered a broadly syndicated loan back then, and

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Speaker 3: now obviously that's you know, there's three people that hold that,

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Speaker 3: and it's a private credit loan, and it might be

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Speaker 3: the exact same company it was back then. So I

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Speaker 3: do think we're going to see more convergence. I do

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Speaker 3: think that you know, certainly the institutions that are well

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Speaker 3: prepared to capitalize on that will do very well.

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Speaker 1: And if you don't need the liquidity, is there enough

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Speaker 1: of a pickup over public in private?

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Speaker 3: Right now?

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Speaker 1: We've talked over the last let's say, almost a year

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Speaker 1: now about the differential and I think the end of

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Speaker 1: end of last year it was around one fifty to

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Speaker 1: two hundred base points more for leverage credit that you'd

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Speaker 1: want to go into private, and now that seems to

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Speaker 1: have kind of been eroded to about one hundred. And

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Speaker 1: you know, again people are asking is that enough? Some

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Speaker 1: people say no, some people say yes. It's wondering what

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Speaker 1: your view is of the differentials into or the arbitrage,

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Speaker 1: you know.

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Speaker 3: To us right now, we think it's a little snug

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Speaker 3: from you know, our multi asset credit process, and we're

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Speaker 3: not looking to go down too many rabbit holes and

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Speaker 3: find too many liquid assets that only give us that

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Speaker 3: hundred basis points spread premium that you're talking about. I

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Speaker 3: think that you know, depending on your time horizon, and

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Speaker 3: that is a very important factor in this, as we're

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Speaker 3: discovering right now with lots of investors who are in

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Speaker 3: private equity, for example, trying to find new ways to

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Speaker 3: generate liquidity from their private equity investments. Depending on your

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Speaker 3: time horizon, one hundred basis points might be plenty if

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Speaker 3: you trust the manager to pick what they're doing and

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Speaker 3: pick the credits the right way. One hundred basis points

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Speaker 3: may be fine. But to us, as we sort of

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Speaker 3: get to look across both of them, we're not really

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Speaker 3: finding a lot of value in those things that are

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Speaker 3: only picking up an extra hundred basis points. We're looking

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Speaker 3: for that one hundred and fifty two hundred, and to

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Speaker 3: be fair, there's not as many opportunities right now to

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Speaker 3: find those things that meet our credit risk profile sort

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Speaker 3: of objectives, and so yeah, we are passing on more

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Speaker 3: of them, which which does lean a little more public

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Speaker 3: than private in that sort of framework.

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Speaker 1: But ultimately, though, take away supply that would have gone

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Speaker 1: to leverage and then just keep those spreads tight because

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Speaker 1: you know, net issuance.

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Speaker 3: Is very low. Yeah, I think there's naturally going to

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Speaker 3: be some area of that that compresses. Is it's just

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Speaker 3: new issue has been anemic. To say the least, M

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Speaker 3: and A is quite low. Traditionally, that's how the private

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Speaker 3: credit you know community filled their coffers and found their

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Speaker 3: deals was financial sponsors buying companies, appreciating the quick execution

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Speaker 3: of only going to two or three institutions getting something done.

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Speaker 3: And now you know, we're in a market where they

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Speaker 3: quite frankly aren't making as many acquisitions, aren't doing as

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Speaker 3: many things, and that means that you know, the relative

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Speaker 3: animal spirits and competition is heated up, and you know,

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Speaker 3: we're taking just as much market share as they're taking

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Speaker 3: from us. And some of the stats would tell you

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Speaker 3: that the essay we be the public credit market are

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Speaker 3: are certainly you know, I think some of the stats

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Speaker 3: would have told you that twenty two to twenty three

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Speaker 3: we certainly lost a lot of market share. You know,

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Speaker 3: those were tough times to get broadly syndicated deals done.

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Speaker 3: I think it's it's come back to an even split.

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Speaker 3: And I think you know, certainly some of the transactions

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Speaker 3: that we're looking at right now in the last month

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Speaker 3: or so would would probably have still fit into the

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Speaker 3: private credit market a while ago. But they're able to

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Speaker 3: get reasonably good execution, much better pricing, good terms, and

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Speaker 3: all you have to do is get it publicly rated

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Speaker 3: and go through a bank.

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Speaker 2: Mike, you were recently on Bloomberg TV's Real Yield program

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Speaker 2: and you talked about know the risk with consumer discretion,

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Speaker 2: which you talked about earlier today, and then you also

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Speaker 2: mentioned idiosyncratic risk, particularly in the communications sector. Now I

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Speaker 2: covered the communications sector. We have plenty of stuff going

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Speaker 2: on right We have Warner Brothers bonds falling into high yield.

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Speaker 2: We have EchoStar, you know, in a fight with the

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Speaker 2: FCC and entering the grace period for the coupon payments.

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Speaker 3: We have all.

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Speaker 2: TCUSA, which you know has a ton of debt. The

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Speaker 2: lower rated notes trading the forty to fifty cents on

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Speaker 2: the dollar screams a candidate for possible LMA. I was

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Speaker 2: just wondering, you know, is that still a sector where

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Speaker 2: you see a lot of single name risk.

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Speaker 3: It is, and I think that the reason why we say,

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Speaker 3: you know, idiosyncratic risk in that sector is because it

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Speaker 3: would be too broad of a brush to just say,

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Speaker 3: you know, for example, hearkening back to the Great Financial Crisis,

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Speaker 3: the auto sector is in trouble, so all of them

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Speaker 3: are in trouble. It's too broad of a brush to

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Speaker 3: paint the communications sector that way, because there are winners

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Speaker 3: and there are losers. There are companies that are winning

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Speaker 3: right now by being tied into the AI infrastructure framework,

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Speaker 3: being tied into fiber to the home, where you know,

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Speaker 3: as consumers are changing their preferences and consuming more streaming content,

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Speaker 3: they need a better pipe in order to get better

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Speaker 3: internet into their home. So that's the sort of haves.

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Speaker 3: And on the havent side of things, there are big

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Speaker 3: legacy institutions that have not changed their ways. They have

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Speaker 3: not you know, invested appropriately in the infrastructure they need

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Speaker 3: to compete in the next twenty years. And the infrastructure

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Speaker 3: that they invested in was great twenty years ago. And

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Speaker 3: those types of businesses, and you just rattled off a

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Speaker 3: few of them that fit into that mold, there's probably

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Speaker 3: more risk that they don't go right than that there's

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Speaker 3: upside that they do go right. And I think that's

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Speaker 3: the sector where and again I think all sectors are

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Speaker 3: this way, but certainly within the communification sector, active management

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Speaker 3: is you know a very important part of it, where

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Speaker 3: you know, you can either avoid these sectors or frankly

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Speaker 3: pick the right parts of these capital structures to win.

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Speaker 3: So yeah, well it's interesting.

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Speaker 2: We've seen the Charter right Charter unsecured, it's the biggest

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Speaker 2: name in high yield, and they had some very positive

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Speaker 2: news with the Cox acquisition. Or even though they're making

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Speaker 2: a major acquisition, they've lowered their preferred leverage target and

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Speaker 2: received you know, positive review from a positive reactions so

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Speaker 2: far from the rating agencies. But that's clearly a big

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Speaker 2: positive deal for the sector and the higal market.

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Speaker 3: Yeah, absolutely, and I think we'll see there's other spots

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Speaker 3: of positivity that are out there. For example, consolidation within

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Speaker 3: some of the broadcasting sector can in fact be a

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Speaker 3: very big positive thing. There's some you know, quite frankly

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Speaker 3: over levered capital structures, but there are attractive assets that

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Speaker 3: are over levered and and they if they can find

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Speaker 3: their way into to the right merger situations. I think

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Speaker 3: there's there's lots of spots where even some of those

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Speaker 3: businesses that are a little more on the cuspier legacy

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Speaker 3: side can find their way towards towards that. But yeah,

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Speaker 3: obviously the one you mentioned is certainly quite topical in

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Speaker 3: the market. You received that news quite well.

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Speaker 2: So and then just dig a little deeper on this

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Speaker 2: h in this sector. So we've seen quite a lot

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Speaker 2: of liability management exercises over the past year, right, Luhmann

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Speaker 2: obviously did a very large one, Echo Star did one,

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Speaker 2: iHeart did one. So we've seen plenty of companies do them.

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Speaker 2: Your viewing, you know, some people say, hey, you're just

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Speaker 2: you know, kicking the can down the road if you're

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Speaker 2: just doing an LME with regard to restructuring the debt

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Speaker 2: and there's nothing going on with restraint ucturing the business.

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Speaker 2: At the same time, just wondering what your views are

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Speaker 2: on LEM transactions.

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Speaker 3: Yeah, that's a that's a broad, broad topic there and

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Speaker 3: certainly one that I think you're hitting on a lot

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Speaker 3: of the themes of you know, what we're seeing right

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Speaker 3: now in that that sector, is that that particular part

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Speaker 3: of the market and that activity is that there are

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Speaker 3: to your point, I think you mentioned a few of them.

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Speaker 3: There are quite a lot of legacy businesses that are

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Speaker 3: you know, for more or less rearranging the deck chairs

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Speaker 3: on the Titanic. And you know, the business is not growing.

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Speaker 3: They're not going to be turning around anytime soon. They're

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Speaker 3: not going to get you know, magical ad spending coming

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Speaker 3: in from from from somewhere. And those businesses are doing

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Speaker 3: lemes and they're you know, playing lender fears off of

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Speaker 3: each other and getting some level of of kick the

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Speaker 3: can down the road. Ultimately, you know, the the sort

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Speaker 3: of stats that we've looked at, it it's sort of

434
00:21:54,720 --> 00:21:57,320
Speaker 3: a coin flip. They're mostly within a year to eighteen

435
00:21:57,359 --> 00:22:00,119
Speaker 3: months seeming to be right back in conventional chapter of

436
00:22:00,160 --> 00:22:03,719
Speaker 3: them now. And I think, you know, for those businesses

437
00:22:03,760 --> 00:22:07,440
Speaker 3: that do not have you know, any solution if you will,

438
00:22:07,560 --> 00:22:10,679
Speaker 3: to growth to to that, we're going to see more

439
00:22:10,680 --> 00:22:13,720
Speaker 3: and more of that. Certainly a lot of the push

440
00:22:13,760 --> 00:22:16,359
Speaker 3: at the end of twenty twenty four to getting some

441
00:22:16,440 --> 00:22:19,000
Speaker 3: of these lemies done, I think there will be a

442
00:22:19,080 --> 00:22:22,800
Speaker 3: higher probability of a lot of those re entering. But

443
00:22:22,880 --> 00:22:26,400
Speaker 3: that being said, you know, there are successful ones. There

444
00:22:26,440 --> 00:22:29,479
Speaker 3: are some that are you know, for example, you know,

445
00:22:29,520 --> 00:22:31,359
Speaker 3: in the healthcare sector. There have been a few of

446
00:22:31,400 --> 00:22:34,720
Speaker 3: them that managed to you know, kick the can and

447
00:22:35,000 --> 00:22:38,240
Speaker 3: you know, their revenue problems. Eventually, you know, they didn't

448
00:22:38,240 --> 00:22:42,280
Speaker 3: they didn't have revenue problems. They are cash generation problems.

449
00:22:42,320 --> 00:22:46,040
Speaker 3: Basically eventually caught up with we have revenue growth, it's

450
00:22:46,080 --> 00:22:49,440
Speaker 3: not growing profitably. And then you know, some of those

451
00:22:49,480 --> 00:22:52,960
Speaker 3: have found their way out into either refinancings or obviously

452
00:22:52,960 --> 00:22:55,119
Speaker 3: the credits trading much tighter than they are now. But

453
00:22:55,920 --> 00:23:00,159
Speaker 3: it is a it is a time consuming process. Yes,

454
00:23:01,160 --> 00:23:05,880
Speaker 3: it is certainly I think something that investors, you know,

455
00:23:05,960 --> 00:23:08,119
Speaker 3: you need to be big to succeed in this. You know,

456
00:23:08,160 --> 00:23:11,000
Speaker 3: it's a scale game, if you will, you need to

457
00:23:11,040 --> 00:23:13,359
Speaker 3: bring you know a lot of institutional resources and it

458
00:23:13,400 --> 00:23:16,880
Speaker 3: takes a lot of our analysts time to to sort

459
00:23:16,920 --> 00:23:19,400
Speaker 3: of go through those. And so, you know, I think

460
00:23:19,440 --> 00:23:23,240
Speaker 3: that on balance, this year we're finding less relative value

461
00:23:23,280 --> 00:23:27,160
Speaker 3: in the LME sector and participating in in every LME

462
00:23:27,359 --> 00:23:30,640
Speaker 3: situation that we see out there in the world. Last

463
00:23:30,680 --> 00:23:32,639
Speaker 3: year was was a little bit more of a you know,

464
00:23:32,680 --> 00:23:36,679
Speaker 3: an opportunity there, and frankly it was driven by technicals

465
00:23:36,720 --> 00:23:39,760
Speaker 3: where you had so much of the CLO market that

466
00:23:39,880 --> 00:23:43,480
Speaker 3: was refinancing and resetting, and their investors were telling them,

467
00:23:43,600 --> 00:23:45,879
Speaker 3: I don't care about it, I just want less triple

468
00:23:45,920 --> 00:23:49,280
Speaker 3: cs in my portfolio. So they were willing to, you know,

469
00:23:49,400 --> 00:23:53,680
Speaker 3: shotgun approach everything out and really reduce their triple C buckets,

470
00:23:53,720 --> 00:23:59,959
Speaker 3: which meant that either people were over overestimating the possibil

471
00:24:00,200 --> 00:24:02,680
Speaker 3: of an LM, so that was one opportunity to pick

472
00:24:02,760 --> 00:24:05,720
Speaker 3: up some returns, but also just the technical factors of

473
00:24:05,800 --> 00:24:07,679
Speaker 3: some of those. There was just so much supply that

474
00:24:07,720 --> 00:24:10,600
Speaker 3: if you could build some scale, you know, affect a

475
00:24:10,600 --> 00:24:13,280
Speaker 3: good positive outcome in a in a fairly decent business,

476
00:24:13,359 --> 00:24:15,239
Speaker 3: you know, the price points were better back at then.

477
00:24:15,800 --> 00:24:17,240
Speaker 1: Given that it's getting tough for those to play the

478
00:24:17,280 --> 00:24:19,080
Speaker 1: enemies there any are there any you just kind of

479
00:24:19,080 --> 00:24:21,320
Speaker 1: shake your head out and then sell out of before

480
00:24:21,359 --> 00:24:23,119
Speaker 1: it gets to that point. I mean, it seems like

481
00:24:23,160 --> 00:24:24,720
Speaker 1: it's getting tougher and more aggressive.

482
00:24:25,400 --> 00:24:29,040
Speaker 3: Yeah, certainly, I think there are. You know. The good

483
00:24:29,080 --> 00:24:32,080
Speaker 3: news is that I think for us, we've been small

484
00:24:32,160 --> 00:24:35,439
Speaker 3: in those situations that you as you rightly said, I

485
00:24:35,440 --> 00:24:37,879
Speaker 3: shake my head at and go this is just time

486
00:24:37,920 --> 00:24:41,679
Speaker 3: to leave, you know, And so it's been quite easy

487
00:24:41,720 --> 00:24:44,640
Speaker 3: for us to extract ourselves from some of those situations.

488
00:24:45,960 --> 00:24:49,800
Speaker 3: But I do think that you know, being earlier on

489
00:24:50,000 --> 00:24:53,560
Speaker 3: and being proactive about what are the exact prospects, sort

490
00:24:53,560 --> 00:24:58,160
Speaker 3: of preparing yourself for, for LM. Not when the asset

491
00:24:58,200 --> 00:25:00,919
Speaker 3: trades at eighty, but when the asset trades at ninety,

492
00:25:01,480 --> 00:25:04,840
Speaker 3: and asking yourself, is this is this something that if

493
00:25:04,880 --> 00:25:07,320
Speaker 3: it found its way to eighty or seventy, that I

494
00:25:07,400 --> 00:25:10,280
Speaker 3: really want to own through the process. If it is,

495
00:25:10,880 --> 00:25:13,320
Speaker 3: then you know, you either build conviction or hold off

496
00:25:13,359 --> 00:25:16,639
Speaker 3: and build more conviction or more often than not. Right

497
00:25:16,680 --> 00:25:18,800
Speaker 3: now we're finding that ninety is the right exit point

498
00:25:18,840 --> 00:25:21,640
Speaker 3: for us, and you know we'll see where those those

499
00:25:21,680 --> 00:25:22,320
Speaker 3: go from here.

500
00:25:22,600 --> 00:25:25,160
Speaker 1: Well, you keep your lawyer on speed done and grit

501
00:25:25,160 --> 00:25:28,560
Speaker 1: your teeth and write it out. But on on Leemies,

502
00:25:28,640 --> 00:25:31,200
Speaker 1: I found it interesting that one of our guests earlier

503
00:25:31,240 --> 00:25:34,600
Speaker 1: this year talked about the relative value in Europe against

504
00:25:34,800 --> 00:25:37,960
Speaker 1: the US. This was a someone who ran a portfolio

505
00:25:37,960 --> 00:25:40,960
Speaker 1: of loans and clos and finding that to be an

506
00:25:41,000 --> 00:25:44,080
Speaker 1: advantage that you know, they don't have this lem situation

507
00:25:44,160 --> 00:25:46,560
Speaker 1: in Europe. And since you know you you really are

508
00:25:46,600 --> 00:25:50,760
Speaker 1: a global credit player, and what is the relative value

509
00:25:50,760 --> 00:25:53,000
Speaker 1: proposition when you look across the world now, because so

510
00:25:53,000 --> 00:25:55,520
Speaker 1: many of our guests it's so focused on the US,

511
00:25:55,560 --> 00:25:57,679
Speaker 1: That's where all the liquidity is, that's where the scale is.

512
00:25:58,000 --> 00:25:59,960
Speaker 1: How do you diversify geographically this point?

513
00:26:00,920 --> 00:26:04,200
Speaker 3: Yeah, I think so. For example, for US, we really

514
00:26:04,240 --> 00:26:06,760
Speaker 3: look at it globally. In our we call it the

515
00:26:06,800 --> 00:26:09,679
Speaker 3: Global High Yield Team for a very specific reason, and

516
00:26:10,200 --> 00:26:13,080
Speaker 3: we do really embrace the fact that the European leverage

517
00:26:13,080 --> 00:26:15,280
Speaker 3: loan market, in the European high yield bond market are

518
00:26:15,560 --> 00:26:20,359
Speaker 3: our key differentiators, especially in times like these where you know,

519
00:26:20,520 --> 00:26:24,119
Speaker 3: US exceptionalism is a little bit more questioned. Investors are

520
00:26:24,760 --> 00:26:28,520
Speaker 3: you know, increasingly concerned about you know US, you know,

521
00:26:28,600 --> 00:26:33,199
Speaker 3: economic policy or politics or anything of that nature, and

522
00:26:33,240 --> 00:26:35,560
Speaker 3: they're looking at what's the best way that I can

523
00:26:35,600 --> 00:26:37,800
Speaker 3: expand my funnel, and one of the best ways is

524
00:26:37,800 --> 00:26:42,160
Speaker 3: obviously to be in Europe. Now, Europe is not without

525
00:26:42,280 --> 00:26:45,480
Speaker 3: its risks, right, You've got you know, twenty some odd

526
00:26:45,520 --> 00:26:49,280
Speaker 3: countries that can compose Europe, and depending on you really

527
00:26:49,359 --> 00:26:52,880
Speaker 3: do need a big, a big research team, local presence

528
00:26:52,920 --> 00:26:55,960
Speaker 3: on the ground, and a lot of years of experience

529
00:26:56,000 --> 00:26:59,439
Speaker 3: to participate in that market. But we do find that

530
00:26:59,480 --> 00:27:03,640
Speaker 3: the relative value is usually a lot more compelling in Europe,

531
00:27:03,760 --> 00:27:06,800
Speaker 3: and you know, there's extra spread that's sort of embedded

532
00:27:06,800 --> 00:27:10,919
Speaker 3: in almost every situation when you know a company is

533
00:27:10,960 --> 00:27:12,800
Speaker 3: coming to issue in the US dollar market. In the

534
00:27:12,840 --> 00:27:15,159
Speaker 3: euro market, you generally speaking get a little bit of

535
00:27:15,200 --> 00:27:18,760
Speaker 3: extra carry. Certainly for US investors, you get a little

536
00:27:18,800 --> 00:27:21,200
Speaker 3: bit of extra carry on hedging that back into usd

537
00:27:21,359 --> 00:27:23,800
Speaker 3: and that's that's always nice money to find between the

538
00:27:23,800 --> 00:27:26,880
Speaker 3: couch cushions. But as we sort of look at it right,

539
00:27:27,000 --> 00:27:29,040
Speaker 3: that market is less liquid and you do need to

540
00:27:29,040 --> 00:27:33,440
Speaker 3: be compensated somewhat for that that illiquidity. You also need

541
00:27:33,480 --> 00:27:35,600
Speaker 3: to be compensated for the fact that when you know

542
00:27:35,680 --> 00:27:38,360
Speaker 3: there's some sort of hiccup in that market for any

543
00:27:38,480 --> 00:27:40,640
Speaker 3: number of reasons, and we can go back to the

544
00:27:40,760 --> 00:27:46,119
Speaker 3: sort of Eurozone crisis of twenty thirteen area, it is

545
00:27:46,160 --> 00:27:50,440
Speaker 3: tough to get liquidity in that sector. And that's also

546
00:27:50,480 --> 00:27:54,600
Speaker 3: an opportunity, frankly, in times when you know, for example,

547
00:27:54,640 --> 00:27:57,119
Speaker 3: the US dollar loan can trade at you know, ninety

548
00:27:57,119 --> 00:27:59,920
Speaker 3: seven ninety eight in an off market, and that you're

549
00:28:00,080 --> 00:28:02,480
Speaker 3: a loan will trade at ninety three ninety four and

550
00:28:02,880 --> 00:28:05,600
Speaker 3: offer you a little bit of extra carry. So we

551
00:28:05,680 --> 00:28:08,600
Speaker 3: always position it with our investors that you know, while

552
00:28:08,640 --> 00:28:10,720
Speaker 3: it's easy to just want to grab on and hold

553
00:28:10,800 --> 00:28:13,280
Speaker 3: on to that little incremental extra yield out of Europe

554
00:28:13,600 --> 00:28:16,359
Speaker 3: as much as you possibly can, you know, being able

555
00:28:16,400 --> 00:28:19,960
Speaker 3: to rotate freely between those those groups is very important.

556
00:28:20,320 --> 00:28:23,080
Speaker 3: I think one other point that I also make in

557
00:28:23,119 --> 00:28:27,000
Speaker 3: that is just you know, especially and this comes across

558
00:28:27,040 --> 00:28:30,639
Speaker 3: more when I'm talking to US investors, is US credit

559
00:28:30,760 --> 00:28:33,320
Speaker 3: risk in the high yield market Generally speaking, you're getting

560
00:28:33,320 --> 00:28:39,000
Speaker 3: big global companies, and I think it's underappreciated how globally oriented,

561
00:28:39,160 --> 00:28:42,760
Speaker 3: particularly as private credit has taken a lot of smaller issuers,

562
00:28:42,760 --> 00:28:44,960
Speaker 3: with a lot of US centric issuers out of our market.

563
00:28:45,280 --> 00:28:48,360
Speaker 3: We're getting into bigger and more global companies. And so

564
00:28:49,160 --> 00:28:51,480
Speaker 3: if you're going to be you're you're already going to

565
00:28:51,480 --> 00:28:54,560
Speaker 3: be invested in the globe, whether you know, whether you

566
00:28:54,600 --> 00:28:56,840
Speaker 3: think you're just buying US highyeld bonds, which is buying

567
00:28:56,920 --> 00:28:59,680
Speaker 3: US high heel loans or not. And so if you

568
00:28:59,760 --> 00:29:02,040
Speaker 3: are going to be invested in that, why not broaden

569
00:29:02,080 --> 00:29:04,800
Speaker 3: your funnel out as wide as possible and pick up

570
00:29:04,840 --> 00:29:08,320
Speaker 3: the extra you know, the companies that are located in Germany,

571
00:29:08,480 --> 00:29:12,680
Speaker 3: the currency opportunities that exist between you know, great British

572
00:29:12,760 --> 00:29:16,480
Speaker 3: pound euro dollar US dollar securities that are out there.

573
00:29:16,520 --> 00:29:19,560
Speaker 3: So that's that's sort of our take right now. I

574
00:29:19,600 --> 00:29:22,959
Speaker 3: think we do see, you know, spreads on are very

575
00:29:23,040 --> 00:29:25,920
Speaker 3: much on a heads up basis us to Europe loans

576
00:29:25,920 --> 00:29:29,320
Speaker 3: and bonds right now, and and you know, we don't

577
00:29:29,320 --> 00:29:32,840
Speaker 3: particularly find a reason to be massively overweight Europe right now,

578
00:29:33,200 --> 00:29:35,800
Speaker 3: but we are, you know, we are, we are. We

579
00:29:35,840 --> 00:29:38,560
Speaker 3: are certainly cognizant that that you know, there's lots of

580
00:29:38,600 --> 00:29:42,200
Speaker 3: opportunities and so broadening the funnel really helps for investors.

581
00:29:42,440 --> 00:29:46,280
Speaker 1: Can you give us a sense of the opportunity in

582
00:29:46,360 --> 00:29:50,320
Speaker 1: terms of you know, sector to country currency even I mean,

583
00:29:50,360 --> 00:29:52,240
Speaker 1: if you could sort of narrow it down a bit,

584
00:29:52,600 --> 00:29:54,360
Speaker 1: as you say, it is quite complex.

585
00:29:54,400 --> 00:29:58,280
Speaker 3: Yeah, it is quite complex, you know, country wise, you know,

586
00:29:58,320 --> 00:30:02,000
Speaker 3: the largest countries that are issuing are predominantly the UK, France,

587
00:30:02,080 --> 00:30:04,880
Speaker 3: Germany as you would expect. The largest you know sort

588
00:30:04,880 --> 00:30:07,480
Speaker 3: of countries that are that are over in Europe Italy

589
00:30:07,520 --> 00:30:10,920
Speaker 3: to a smaller degree, and then obviously the Nordics there

590
00:30:10,920 --> 00:30:14,160
Speaker 3: are some issuers there as well. So you do want

591
00:30:14,160 --> 00:30:16,720
Speaker 3: to be very cognizant of you know, we certainly like

592
00:30:16,800 --> 00:30:19,160
Speaker 3: to to joke around with investors about its wine and

593
00:30:19,200 --> 00:30:23,120
Speaker 3: beer economies. But but to some degree, you know, there

594
00:30:23,200 --> 00:30:26,240
Speaker 3: is I think some value to be had in that analogy.

595
00:30:27,000 --> 00:30:29,400
Speaker 3: But to be fair, I think there are there are

596
00:30:29,440 --> 00:30:32,320
Speaker 3: some very some very big, you know, geographical differences. The

597
00:30:32,400 --> 00:30:35,960
Speaker 3: way way they treat bankruptcies, for example, in France is

598
00:30:36,040 --> 00:30:39,680
Speaker 3: very different than the UK, and so you know, all

599
00:30:39,720 --> 00:30:42,080
Speaker 3: of those things, I think investors need to be, you know,

600
00:30:42,440 --> 00:30:46,720
Speaker 3: very cognizant and very very understanding of the predominance of

601
00:30:46,760 --> 00:30:50,000
Speaker 3: issue comes in Euros. As you can imagine, most of

602
00:30:50,040 --> 00:30:52,600
Speaker 3: the country operates on that currency block, and so that's

603
00:30:52,640 --> 00:30:55,760
Speaker 3: the reason why they're issuing there. But there are selected

604
00:30:55,800 --> 00:30:59,440
Speaker 3: opportunities that exist in the Great British Pound in some

605
00:30:59,440 --> 00:31:03,960
Speaker 3: sterling to nominated assets that have significantly less liquidity, but

606
00:31:04,000 --> 00:31:06,240
Speaker 3: you also get a lot of extra spread and carry

607
00:31:06,280 --> 00:31:10,000
Speaker 3: for those, and so investors who are willing to be

608
00:31:10,160 --> 00:31:12,000
Speaker 3: in what I would call a little bit of a

609
00:31:12,040 --> 00:31:14,400
Speaker 3: less liquid market within Europe can also pick up a

610
00:31:14,400 --> 00:31:18,640
Speaker 3: lot of additional yield there as well. Sector Wise, the

611
00:31:18,640 --> 00:31:22,240
Speaker 3: differences to the US I think are pretty important to

612
00:31:22,280 --> 00:31:27,239
Speaker 3: think about, particularly on the eurobond side. For example, in

613
00:31:27,280 --> 00:31:30,240
Speaker 3: the US we have a very heavy reliance on energy.

614
00:31:30,320 --> 00:31:34,760
Speaker 3: It's the largest sector in the USI yield benchmark. In Europe,

615
00:31:34,920 --> 00:31:37,280
Speaker 3: it's hardly anything to talk about over in Europe right

616
00:31:37,320 --> 00:31:40,200
Speaker 3: there's not a lot of oil exporting countries. There are

617
00:31:40,200 --> 00:31:42,680
Speaker 3: a couple of services related business in the Nordics, but

618
00:31:42,760 --> 00:31:45,200
Speaker 3: not a lot to talk about there. However, they do

619
00:31:45,280 --> 00:31:48,720
Speaker 3: have a large auto sector obviously, as you can think about,

620
00:31:48,720 --> 00:31:52,320
Speaker 3: the French auto sectors is large. The UK has a

621
00:31:52,360 --> 00:31:55,720
Speaker 3: smaller degree in the German auto sector and related parts

622
00:31:55,760 --> 00:31:58,960
Speaker 3: and services businesses all exist in that sector, so it's

623
00:31:58,960 --> 00:32:02,840
Speaker 3: a larger percentage of that sector. The other option is

624
00:32:03,200 --> 00:32:05,760
Speaker 3: the other sector that's also well a little more more

625
00:32:05,800 --> 00:32:09,280
Speaker 3: well represented in Europe is real estate, particularly some of

626
00:32:09,280 --> 00:32:11,520
Speaker 3: the commercial real estate businesses and some of the building

627
00:32:11,600 --> 00:32:14,720
Speaker 3: businesses that are over there. And so you know, for

628
00:32:14,840 --> 00:32:17,280
Speaker 3: us right now, that's not necessarily a spot we're leaning into.

629
00:32:17,520 --> 00:32:20,640
Speaker 3: Those two sectors that I just mentioned are squarely in

630
00:32:20,680 --> 00:32:24,280
Speaker 3: the crosshairs of sort of concerns in the European economy.

631
00:32:24,800 --> 00:32:27,440
Speaker 3: But that being said, there are still lots of things

632
00:32:27,440 --> 00:32:30,040
Speaker 3: and lots of differences where you can play those sectors

633
00:32:30,080 --> 00:32:32,880
Speaker 3: off of each other. Over time and ad attractive attractive

634
00:32:32,880 --> 00:32:34,280
Speaker 3: returns for investors globally.

635
00:32:34,440 --> 00:32:36,520
Speaker 2: Mike, you talked a little bit about issuance. If we

636
00:32:36,560 --> 00:32:41,320
Speaker 2: think about US issuance, both high yield and US levered loans,

637
00:32:41,680 --> 00:32:44,440
Speaker 2: a year to date, we're trailing pretty far behind the

638
00:32:44,520 --> 00:32:47,080
Speaker 2: levels of the past year. Things a little bit better

639
00:32:47,080 --> 00:32:49,480
Speaker 2: over the past two months, but year to date we're

640
00:32:49,520 --> 00:32:52,360
Speaker 2: still down compared to what we did last year. Are

641
00:32:52,440 --> 00:32:54,440
Speaker 2: you guys seeing enough deals to look at? Is there

642
00:32:54,560 --> 00:32:56,200
Speaker 2: enough paper out there to buy?

643
00:32:56,800 --> 00:33:00,000
Speaker 3: Yeah? Well, what I would say is we're still under support,

644
00:33:00,360 --> 00:33:04,400
Speaker 3: but we're not as chronically undersupplied as we were about

645
00:33:04,440 --> 00:33:07,040
Speaker 3: a year ago. If I will rewind about a year ago,

646
00:33:07,160 --> 00:33:10,400
Speaker 3: where you know, the loan market was pushing about forty

647
00:33:10,480 --> 00:33:12,720
Speaker 3: or forty to fifty percent of it was trading up

648
00:33:12,800 --> 00:33:17,520
Speaker 3: and over par, indicating that you know, clos and investors

649
00:33:17,520 --> 00:33:20,200
Speaker 3: are trying to fill fill out portfolios and not able

650
00:33:20,240 --> 00:33:23,280
Speaker 3: to find enough supply. Right now, we've got a market

651
00:33:23,320 --> 00:33:25,400
Speaker 3: in which you know, probably about twenty percent of our

652
00:33:25,400 --> 00:33:28,160
Speaker 3: market is up and over par right now, indicating that

653
00:33:28,880 --> 00:33:31,760
Speaker 3: you know, there's there's still not that dynamic quite yet

654
00:33:31,800 --> 00:33:35,120
Speaker 3: where where we're under supplied. But your point is, well

655
00:33:35,120 --> 00:33:38,720
Speaker 3: taken Steven that if you think back to the you know,

656
00:33:38,760 --> 00:33:40,520
Speaker 3: sort of beginning of this year, we got off to

657
00:33:40,560 --> 00:33:42,800
Speaker 3: a little bit of a start with new issue. We

658
00:33:42,920 --> 00:33:46,560
Speaker 3: then spent most of March fearful about what was going

659
00:33:46,600 --> 00:33:48,480
Speaker 3: to happen at the beginning of April, so not a

660
00:33:48,480 --> 00:33:52,000
Speaker 3: lot of people were issuing. You know, we obviously had

661
00:33:52,080 --> 00:33:55,080
Speaker 3: quite the hiccup, if you will, in April in terms

662
00:33:55,120 --> 00:33:59,600
Speaker 3: of tariff related volatility, yield spiked, things of that nature,

663
00:33:59,680 --> 00:34:03,120
Speaker 3: and so we just we took two months off right there.

664
00:34:03,320 --> 00:34:05,720
Speaker 3: It took some time for that volatility come back down.

665
00:34:05,880 --> 00:34:09,000
Speaker 3: It took a little bit of time for the COLO market,

666
00:34:09,000 --> 00:34:11,680
Speaker 3: for example, to sort of ramp back up and really

667
00:34:11,719 --> 00:34:14,920
Speaker 3: have that demand for discounted paper. We're in that period

668
00:34:14,960 --> 00:34:18,080
Speaker 3: now where you know, we are busier than we've ever been,

669
00:34:19,440 --> 00:34:23,000
Speaker 3: and to be fair, we're creeping towards that undersupplied market

670
00:34:23,120 --> 00:34:26,400
Speaker 3: again right now. I do think, you know, there's been

671
00:34:26,440 --> 00:34:29,040
Speaker 3: a lot of full forward. There are certainly deals that

672
00:34:30,480 --> 00:34:34,920
Speaker 3: have come forward for refise refinancing much sooner than we

673
00:34:35,000 --> 00:34:37,920
Speaker 3: probably expected them to, and they're trying to hit the

674
00:34:37,960 --> 00:34:41,320
Speaker 3: market right now. While while things are open, while spreads

675
00:34:41,320 --> 00:34:45,359
Speaker 3: look relatively cheap, to them, and you know, as we

676
00:34:45,400 --> 00:34:47,400
Speaker 3: sort of look at it, I think that that we

677
00:34:47,480 --> 00:34:49,640
Speaker 3: don't see enough of an M and a calendar to

678
00:34:49,680 --> 00:34:52,239
Speaker 3: really build a back half of the year that is

679
00:34:52,280 --> 00:34:54,880
Speaker 3: going to be oversupplied by any stretch of the imagination.

680
00:34:55,600 --> 00:34:58,520
Speaker 1: So just on your point about Europe, I mean, it's

681
00:34:58,520 --> 00:35:01,440
Speaker 1: obviously no better there in terms of issue vants and

682
00:35:01,480 --> 00:35:03,680
Speaker 1: it's very tight crosspod. But in terms of the value

683
00:35:03,719 --> 00:35:05,640
Speaker 1: proposition that you mentioned that that you know, there is

684
00:35:05,680 --> 00:35:08,320
Speaker 1: more value in Europe, I think a lot of people

685
00:35:08,520 --> 00:35:10,520
Speaker 1: work up to that fact on April second over here

686
00:35:10,560 --> 00:35:12,960
Speaker 1: that you know they should start looking and suddenly started

687
00:35:13,280 --> 00:35:15,839
Speaker 1: you know, you know, bringing their broken and find out

688
00:35:15,880 --> 00:35:18,319
Speaker 1: what value. How has that changed over the last couple

689
00:35:18,320 --> 00:35:19,920
Speaker 1: of months. It has it compressed at all?

690
00:35:20,440 --> 00:35:23,000
Speaker 3: It has compressed a little bit. Yeah, I think that,

691
00:35:23,840 --> 00:35:28,000
Speaker 3: you know, europe European loan market, for example, was offering

692
00:35:28,040 --> 00:35:31,080
Speaker 3: fifty to seventy five basis points of extra spread on

693
00:35:31,160 --> 00:35:34,480
Speaker 3: a headline basis. Right now they look exactly equal. So

694
00:35:34,480 --> 00:35:37,680
Speaker 3: so yes, that has compressed a little bit. I think

695
00:35:37,960 --> 00:35:42,239
Speaker 3: more broadly than that, you know, investors are I think

696
00:35:42,760 --> 00:35:45,400
Speaker 3: and we see it just because almost all of our

697
00:35:45,400 --> 00:35:48,560
Speaker 3: investors are globally oriented by their very nature, by being

698
00:35:48,600 --> 00:35:51,200
Speaker 3: part of our our global high yield bond franchise, our

699
00:35:51,239 --> 00:35:54,919
Speaker 3: bond and loan franchise. But we have been getting more

700
00:35:54,960 --> 00:35:58,960
Speaker 3: calls about, hey, I am interested in a globally oriented strategy,

701
00:35:59,120 --> 00:36:02,799
Speaker 3: or hey, hey, you know we we for example, you know,

702
00:36:02,880 --> 00:36:04,880
Speaker 3: have a lot of US centric managers and we have

703
00:36:04,960 --> 00:36:07,200
Speaker 3: you guys that do global Hey, we'd like to talk

704
00:36:07,200 --> 00:36:10,160
Speaker 3: about expanding the opportunity set or expanding the mandate. And

705
00:36:10,200 --> 00:36:13,680
Speaker 3: I think that that will probably in the near term,

706
00:36:14,560 --> 00:36:19,480
Speaker 3: create a very strong technical demand for European assets. People

707
00:36:19,520 --> 00:36:22,799
Speaker 3: want to diversify out of the US to some degree.

708
00:36:22,960 --> 00:36:26,840
Speaker 3: You know, the question will be over time and again,

709
00:36:26,920 --> 00:36:30,600
Speaker 3: does supply meet the demand and their supply. You know,

710
00:36:30,640 --> 00:36:34,200
Speaker 3: if you think our supply has been quiet and anemic,

711
00:36:34,280 --> 00:36:36,880
Speaker 3: theirs has been even more so. And you know, the

712
00:36:36,960 --> 00:36:40,640
Speaker 3: question will be to some degree it'll be sponsored the driven,

713
00:36:40,760 --> 00:36:43,360
Speaker 3: or it will be public you know, large public corporates driven.

714
00:36:43,440 --> 00:36:46,520
Speaker 3: But will they also see the same value in Europe

715
00:36:46,560 --> 00:36:50,400
Speaker 3: in diversifying their portfolios, in moving their investor base. And

716
00:36:50,440 --> 00:36:52,440
Speaker 3: if they do, and if they lead the way, then

717
00:36:52,440 --> 00:36:54,600
Speaker 3: I think the credit market will sort of be able

718
00:36:54,640 --> 00:36:58,320
Speaker 3: to follow them. A little bit more easily, you know,

719
00:36:58,400 --> 00:37:01,680
Speaker 3: out of the US and into Europe, and emerging markets

720
00:37:01,800 --> 00:37:05,000
Speaker 3: just tend not to be as big of an opportunity

721
00:37:05,000 --> 00:37:07,600
Speaker 3: set because there's a whole different set of you know,

722
00:37:07,719 --> 00:37:11,160
Speaker 3: sovereign issues that go on there. So the investors we're

723
00:37:11,200 --> 00:37:15,439
Speaker 3: speaking with are predominantly looking at diversifying themselves by sort

724
00:37:15,480 --> 00:37:18,160
Speaker 3: of looking into the US and then adding the European

725
00:37:18,160 --> 00:37:22,080
Speaker 3: angle as well, not Asia. Not Asia so much. I

726
00:37:22,120 --> 00:37:24,560
Speaker 3: think a large portion of that is because they just

727
00:37:24,600 --> 00:37:28,279
Speaker 3: don't have very sophisticated capital markets for leverage loans and

728
00:37:28,360 --> 00:37:30,319
Speaker 3: hig yield bonds and things of that nature. It tends

729
00:37:30,360 --> 00:37:32,440
Speaker 3: to be more bank centric in that market, and so

730
00:37:33,000 --> 00:37:34,960
Speaker 3: we haven't seen that as much. You do see some

731
00:37:35,239 --> 00:37:39,600
Speaker 3: marginal issuance that comes out of Australia occasionally into the

732
00:37:39,600 --> 00:37:42,200
Speaker 3: broadly syndicated markets, but even there they tend to be

733
00:37:42,239 --> 00:37:44,400
Speaker 3: a little bit more of a private credit oriented market.

734
00:37:44,480 --> 00:37:47,960
Speaker 1: So does that over time push European and US spreads

735
00:37:48,000 --> 00:37:50,960
Speaker 1: closer together as a convergence between those two regions.

736
00:37:50,960 --> 00:37:53,680
Speaker 3: I think I think it will, But you have to

737
00:37:53,680 --> 00:37:56,080
Speaker 3: go back to the fact that they're you know, they

738
00:37:56,239 --> 00:37:59,440
Speaker 3: are roughly a quarter of the size of the US market,

739
00:37:59,520 --> 00:38:01,880
Speaker 3: and so there's a lot of catching up to do,

740
00:38:02,080 --> 00:38:05,120
Speaker 3: if you will, in terms of liquidity, and so, you know,

741
00:38:05,160 --> 00:38:07,759
Speaker 3: the tide doesn't always just come in. Sometimes it goes

742
00:38:07,760 --> 00:38:10,760
Speaker 3: out as well. And that's where where we think we'll

743
00:38:10,800 --> 00:38:13,959
Speaker 3: add a lot of value is when when the tide

744
00:38:14,000 --> 00:38:16,440
Speaker 3: goes out, we can switch from US to Europe quite easily,

745
00:38:16,480 --> 00:38:20,040
Speaker 3: and when things look quite compressed, we can can keep

746
00:38:20,040 --> 00:38:22,080
Speaker 3: a more neutral allocation between the two.

747
00:38:22,360 --> 00:38:25,040
Speaker 1: In terms of stretch of products as well. I mean,

748
00:38:25,160 --> 00:38:28,799
Speaker 1: we talked a lot about loans, but CLOS comes up

749
00:38:28,920 --> 00:38:33,560
Speaker 1: very often on this show as a defensive asset in

750
00:38:33,640 --> 00:38:36,279
Speaker 1: a in a somewhat turbulent world. How do you feel

751
00:38:36,320 --> 00:38:37,359
Speaker 1: about CLOS right now?

752
00:38:37,800 --> 00:38:40,839
Speaker 3: Well, you know, I think that we certainly felt really

753
00:38:40,920 --> 00:38:43,920
Speaker 3: great about CLOS when they were trading at very widespreads

754
00:38:43,960 --> 00:38:46,160
Speaker 3: in sort of the panicked periods of twenty two and

755
00:38:46,239 --> 00:38:49,040
Speaker 3: twenty three, and that's when we, you know, really put

756
00:38:49,080 --> 00:38:52,360
Speaker 3: in our sort of maximum weightings in that asset class.

757
00:38:52,840 --> 00:38:56,120
Speaker 3: But as we get down into a tight spread environment,

758
00:38:57,160 --> 00:39:01,520
Speaker 3: we do think that the relative value between underlying collateral,

759
00:39:01,560 --> 00:39:04,560
Speaker 3: which is the US leverage loan market for example, and

760
00:39:05,000 --> 00:39:07,600
Speaker 3: double B or triple B rated leverage loans is quite

761
00:39:07,640 --> 00:39:11,520
Speaker 3: squeezed and compressed. Now. One of the only reasons we're

762
00:39:11,560 --> 00:39:13,880
Speaker 3: not necessarily at a point where we say, well, we

763
00:39:13,920 --> 00:39:17,000
Speaker 3: want to just avoid that entirely because I don't believe

764
00:39:17,000 --> 00:39:22,160
Speaker 3: that at all, is that those portfolios, in particular in

765
00:39:22,200 --> 00:39:24,839
Speaker 3: the COLO market have really cleaned up their act if

766
00:39:24,880 --> 00:39:28,360
Speaker 3: you will. They're carrying fewer B three and B mins

767
00:39:28,400 --> 00:39:33,439
Speaker 3: assets they are, they are carrying much less triple C risk,

768
00:39:33,560 --> 00:39:38,000
Speaker 3: and particularly every refinancing and reset that happens, those investors

769
00:39:38,040 --> 00:39:40,680
Speaker 3: are going to the managers and saying, hey, you are

770
00:39:40,719 --> 00:39:43,279
Speaker 3: at six percent, I need JET three percent triple c's,

771
00:39:43,400 --> 00:39:45,040
Speaker 3: or you're at three percent, I need JET one percent

772
00:39:45,040 --> 00:39:49,120
Speaker 3: triple cs. And so that does back to your point

773
00:39:49,200 --> 00:39:52,120
Speaker 3: of those are portfolios that can weather any storm, even

774
00:39:52,160 --> 00:39:55,280
Speaker 3: if we go through a recession. You're getting extra spread,

775
00:39:55,280 --> 00:39:59,560
Speaker 3: You're getting extra complexity premium associated with that. And as

776
00:39:59,600 --> 00:40:01,920
Speaker 3: long as you picked good managers who don't do anything

777
00:40:02,480 --> 00:40:05,680
Speaker 3: you know, bad during during any of those periods, you

778
00:40:05,719 --> 00:40:08,240
Speaker 3: should be able to really enjoy that carry. But again,

779
00:40:08,360 --> 00:40:11,160
Speaker 3: time horizon matters, and and for our investors in our

780
00:40:11,239 --> 00:40:14,920
Speaker 3: multi asset credit process, we want that relative spread between

781
00:40:15,040 --> 00:40:18,399
Speaker 3: double b's and double B rated clos single be rated

782
00:40:18,440 --> 00:40:20,799
Speaker 3: loans to be a little bit wider before we sort

783
00:40:20,800 --> 00:40:23,560
Speaker 3: of load the boat, if you will, But we are

784
00:40:23,600 --> 00:40:26,600
Speaker 3: closer to neutrally allocated, and you know, if things tighten

785
00:40:26,680 --> 00:40:28,680
Speaker 3: up a good bit there, you know, we're certainly not

786
00:40:28,719 --> 00:40:31,360
Speaker 3: afraid to be completely out of the asset class entirely.

787
00:40:31,520 --> 00:40:35,640
Speaker 3: But but it does seem quite balanced. And and that's

788
00:40:35,680 --> 00:40:37,799
Speaker 3: the reason why it's it's, you know, my opinion, an

789
00:40:37,800 --> 00:40:40,279
Speaker 3: easy asset class to defend, at least owning some of

790
00:40:40,400 --> 00:40:40,799
Speaker 3: right now.

791
00:40:41,320 --> 00:40:43,640
Speaker 1: Right but you don't worry about the defaults picking up

792
00:40:43,640 --> 00:40:46,759
Speaker 1: in loans and the recoveries being very very low. And

793
00:40:46,800 --> 00:40:48,640
Speaker 1: you know, there seems to be you know, it's quite

794
00:40:48,640 --> 00:40:51,160
Speaker 1: a lot of strain generally on the on the loan market,

795
00:40:51,160 --> 00:40:54,439
Speaker 1: and maybe maybe people are buying or mispricing the risk

796
00:40:54,480 --> 00:40:56,280
Speaker 1: because it's there's not enough supply.

797
00:40:56,880 --> 00:40:59,640
Speaker 3: Yeah, I think that I harken back to the fact

798
00:40:59,640 --> 00:41:02,440
Speaker 3: of just the B three and B minus and lower

799
00:41:02,520 --> 00:41:07,440
Speaker 3: rated portions being much smaller parts of these portfolios. I

800
00:41:07,840 --> 00:41:11,000
Speaker 3: think that they're designed to have defaults. They're designed to

801
00:41:11,040 --> 00:41:15,120
Speaker 3: have losses. Yes, if you estimate that, you know, defaults

802
00:41:15,200 --> 00:41:18,799
Speaker 3: average two percent to three percent a year and recoveries

803
00:41:18,840 --> 00:41:22,120
Speaker 3: are fifty cents on the dollar for every single one

804
00:41:22,160 --> 00:41:25,600
Speaker 3: of those years. Then you know, you still make you

805
00:41:25,760 --> 00:41:28,239
Speaker 3: still get all your all your at the at the

806
00:41:28,280 --> 00:41:30,640
Speaker 3: mes level, you still get all of your all of

807
00:41:30,680 --> 00:41:32,959
Speaker 3: your principle back and you get a really nice carry

808
00:41:33,000 --> 00:41:35,799
Speaker 3: along the way. And so for us, we think that

809
00:41:35,840 --> 00:41:38,000
Speaker 3: the portfolios are being set up for that level of

810
00:41:38,040 --> 00:41:40,759
Speaker 3: success right now. But it hasn't always been the case.

811
00:41:40,840 --> 00:41:43,240
Speaker 3: Right If you look back into twenty twenty one vintage

812
00:41:43,280 --> 00:41:46,360
Speaker 3: clos for example, they weren't all set up for success.

813
00:41:46,400 --> 00:41:48,359
Speaker 3: They were carrying some of them were carrying a lot

814
00:41:48,360 --> 00:41:50,799
Speaker 3: of B three and B minus rated risk. They were

815
00:41:50,840 --> 00:41:53,000
Speaker 3: stretching on the margin to get some triple C risk.

816
00:41:53,600 --> 00:41:56,480
Speaker 3: You know, they've certainly had a tougher time navigating this environment.

817
00:41:56,600 --> 00:41:59,120
Speaker 3: And so we do see the portfolio is being set

818
00:41:59,200 --> 00:42:01,759
Speaker 3: up much more so cessfully than they were in some

819
00:42:01,880 --> 00:42:04,640
Speaker 3: of the heyday periods of the years past.

820
00:42:04,880 --> 00:42:06,560
Speaker 2: What are you most worried about for the rest of the.

821
00:42:06,600 --> 00:42:09,080
Speaker 3: Year, You know, I don't really see a lot of

822
00:42:09,120 --> 00:42:11,439
Speaker 3: other major risks in the second half of the year.

823
00:42:11,480 --> 00:42:14,759
Speaker 3: I think what we are looking for is over the

824
00:42:14,800 --> 00:42:17,160
Speaker 3: next few months of the year, and that will judge

825
00:42:17,160 --> 00:42:18,960
Speaker 3: how the back half of the year is is what

826
00:42:19,080 --> 00:42:21,560
Speaker 3: of the impacts from tariffs spen. We just simply haven't

827
00:42:21,600 --> 00:42:24,640
Speaker 3: seen the goods arrived to the shore with the tariffs

828
00:42:24,680 --> 00:42:27,400
Speaker 3: seen the consumers have to spend their money on on

829
00:42:27,480 --> 00:42:31,280
Speaker 3: these more expensive goods. So we simply we haven't felt

830
00:42:31,280 --> 00:42:34,480
Speaker 3: the impact of what happened in April yet on the

831
00:42:34,600 --> 00:42:38,520
Speaker 3: consumer budget. And as we sort of you know, I

832
00:42:38,560 --> 00:42:41,400
Speaker 3: think look out for the next you know, twelve months.

833
00:42:41,960 --> 00:42:45,319
Speaker 3: That is the spot where you know, they're the tail

834
00:42:45,400 --> 00:42:48,319
Speaker 3: risks are the largest. And if you know, if all

835
00:42:48,360 --> 00:42:50,839
Speaker 3: the tariffs come in and it's twenty five percent here

836
00:42:50,840 --> 00:42:53,600
Speaker 3: and seventy percent from this country and thirty percent on

837
00:42:53,680 --> 00:42:57,160
Speaker 3: this product over here, those are going to have meaningful impacts.

838
00:42:57,719 --> 00:43:00,399
Speaker 3: If if it turns out that that the as things

839
00:43:00,440 --> 00:43:02,600
Speaker 3: come through and that they're passed along, then you know,

840
00:43:02,640 --> 00:43:05,080
Speaker 3: we can you know, sort of keep grinding on from

841
00:43:05,120 --> 00:43:08,200
Speaker 3: here for quite a bit of time. Outside of that,

842
00:43:08,480 --> 00:43:11,080
Speaker 3: you know, I think some of the biggest risks, frankly,

843
00:43:11,120 --> 00:43:13,719
Speaker 3: have been sort of shrugged off by the market. I

844
00:43:13,719 --> 00:43:15,600
Speaker 3: think one of the biggest risks that we were quite

845
00:43:15,640 --> 00:43:19,160
Speaker 3: concerned about was just escalating tensions in the Middle East,

846
00:43:19,160 --> 00:43:21,920
Speaker 3: and does that cause oil prices to spike two one

847
00:43:22,000 --> 00:43:24,359
Speaker 3: hundred and thirty dollars a barrel or something like that,

848
00:43:24,440 --> 00:43:26,120
Speaker 3: and that's that's going to take a big bite out

849
00:43:26,120 --> 00:43:30,120
Speaker 3: of consumers. Obviously, we've been been exchanging missiles with Iran

850
00:43:30,960 --> 00:43:34,520
Speaker 3: in Israel and the United States over the last few days,

851
00:43:34,560 --> 00:43:38,720
Speaker 3: and oil prices have gone down and there's been relative

852
00:43:38,760 --> 00:43:41,960
Speaker 3: calm in that market, and so you know, each successive

853
00:43:42,160 --> 00:43:45,800
Speaker 3: sort of risk point sort of goes away, and it

854
00:43:45,880 --> 00:43:48,680
Speaker 3: certainly you know, I think obviously the US tax bill

855
00:43:48,719 --> 00:43:51,360
Speaker 3: will also fit into that as well, which you know,

856
00:43:51,440 --> 00:43:54,319
Speaker 3: all signs are pointing to something getting done. But that's

857
00:43:54,400 --> 00:43:57,959
Speaker 3: also a bit of a spot of concern for investors there.

858
00:43:58,040 --> 00:44:00,799
Speaker 3: But I think that you know, we've been shrugging a

859
00:44:00,800 --> 00:44:02,799
Speaker 3: lot of these things off, and so it's it's really

860
00:44:02,880 --> 00:44:05,080
Speaker 3: just about about the data as it sort of comes

861
00:44:05,080 --> 00:44:07,440
Speaker 3: through the through the readings over the next couple of

862
00:44:07,480 --> 00:44:08,600
Speaker 3: weeks months.

863
00:44:09,040 --> 00:44:11,040
Speaker 1: Okay, But you do sound, you know, despite all these

864
00:44:11,520 --> 00:44:14,400
Speaker 1: challenges and risks and all this uncertainty, you do sound

865
00:44:14,520 --> 00:44:17,719
Speaker 1: fairly optimistic. What is the biggest opportunity do you think,

866
00:44:17,719 --> 00:44:19,040
Speaker 1: min where's the best relative value?

867
00:44:19,400 --> 00:44:22,239
Speaker 3: Yeah? For us, I think it's in you know, what

868
00:44:22,280 --> 00:44:25,279
Speaker 3: I would call single bee leverage loans. I think additionally,

869
00:44:25,320 --> 00:44:29,600
Speaker 3: it's some of the crossover opportunities that exist in the

870
00:44:30,600 --> 00:44:33,760
Speaker 3: senior secured bond market, for example, where there's some smaller

871
00:44:33,800 --> 00:44:36,799
Speaker 3: issuers that are out there where investors can really get

872
00:44:36,800 --> 00:44:39,239
Speaker 3: paid to roll up their sleeves. I think that's the

873
00:44:39,280 --> 00:44:42,200
Speaker 3: most you know, sort of target rich environment out there.

874
00:44:42,719 --> 00:44:46,080
Speaker 3: I think certainly, you know, while on the surface, I

875
00:44:46,120 --> 00:44:48,680
Speaker 3: think investors would would probably love to tell you that,

876
00:44:49,360 --> 00:44:52,360
Speaker 3: and certainly the data bears this out that triple C

877
00:44:52,520 --> 00:44:55,200
Speaker 3: rated bonds are at their widest level to single bees

878
00:44:55,239 --> 00:44:57,520
Speaker 3: as they've been in a while, and that that should

879
00:44:57,600 --> 00:45:00,719
Speaker 3: quote unquote be a target rich environment. I think, you know,

880
00:45:00,760 --> 00:45:03,200
Speaker 3: for us, as we're sort of looking through through that

881
00:45:03,600 --> 00:45:07,279
Speaker 3: that opportunity set, there are fewer options that exist at

882
00:45:07,280 --> 00:45:09,560
Speaker 3: the good end of that spectrum and more problems. But

883
00:45:09,719 --> 00:45:11,920
Speaker 3: I will say that there are some good things in

884
00:45:11,920 --> 00:45:16,160
Speaker 3: that sector that are improving credits. Improving stories likely take

885
00:45:16,200 --> 00:45:19,040
Speaker 3: out candidates in the very near term, and so we

886
00:45:19,080 --> 00:45:21,879
Speaker 3: think that that's really good relative value. We just don't

887
00:45:21,880 --> 00:45:24,319
Speaker 3: see as much you know what I would call opportunity

888
00:45:24,480 --> 00:45:27,839
Speaker 3: in credit spreads in the double B rated sectors. Those

889
00:45:27,840 --> 00:45:32,239
Speaker 3: are very technically driven, you know, and certainly spreads are

890
00:45:32,360 --> 00:45:34,640
Speaker 3: very very tight there, so you know, we're sort of

891
00:45:34,680 --> 00:45:38,840
Speaker 3: avoiding that, continuing with our sort of single b views

892
00:45:39,520 --> 00:45:42,120
Speaker 3: of the world. And then you know, I think there's

893
00:45:42,160 --> 00:45:44,680
Speaker 3: still a lot of opportunity within the CLO landscape to

894
00:45:44,760 --> 00:45:49,040
Speaker 3: sort of particularly on mezzanine and even colo equity for

895
00:45:49,120 --> 00:45:51,120
Speaker 3: some investors in some strategies.

896
00:45:51,239 --> 00:45:52,879
Speaker 1: And just to be clear, Mike, because we've talked about

897
00:45:52,880 --> 00:45:56,600
Speaker 1: the whole world, do these comments relate to europe US both?

898
00:45:57,040 --> 00:46:00,000
Speaker 3: Is there both? Yeah? Right now, I think it's very

899
00:46:00,160 --> 00:46:02,600
Speaker 3: much of a both comment. You know, there certainly have

900
00:46:02,640 --> 00:46:05,560
Speaker 3: been periods over the time where you know, Bearings has

901
00:46:05,600 --> 00:46:09,040
Speaker 3: pounded the table over that the European loan single b

902
00:46:09,200 --> 00:46:12,879
Speaker 3: asset class is a greatest opportunity in the world. Right now,

903
00:46:13,080 --> 00:46:16,360
Speaker 3: I think we're pretty neutral in thoughts about those sectors

904
00:46:16,440 --> 00:46:19,240
Speaker 3: right now, and so I think my comment is pretty

905
00:46:19,239 --> 00:46:20,480
Speaker 3: global in nature right now.

906
00:46:20,719 --> 00:46:23,240
Speaker 1: Great stuff, Mike, best from Bearings. Many thanks for joining.

907
00:46:23,120 --> 00:46:25,319
Speaker 3: Us on the Credit Edge, Thanks for having me, and.

908
00:46:25,280 --> 00:46:28,120
Speaker 1: Of course very grateful to Steve Flynn from Bloomberg Intelligence.

909
00:46:28,200 --> 00:46:29,400
Speaker 1: Thank you for joining us today.

910
00:46:29,520 --> 00:46:31,000
Speaker 2: Thank you for having me for more.

911
00:46:30,880 --> 00:46:33,560
Speaker 1: Credit market analysis and insights. Read all of Steve's great

912
00:46:33,560 --> 00:46:36,719
Speaker 1: work on the Bloomberg Terminal. Bloomberg Intelligence is part of

913
00:46:36,719 --> 00:46:39,799
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914
00:46:39,800 --> 00:46:43,200
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915
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916
00:46:46,320 --> 00:46:51,000
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921
00:47:05,200 --> 00:47:07,399
Speaker 1: I'm James Crombie. It's been a pleasure having you join

922
00:47:07,480 --> 00:47:10,600
Speaker 1: us again next week on the Credit Edge