WEBVTT - The Anonymous Meme Account Chronicling Credit Market Craziness 0:00:09.800 --> 0:00:13.080 Hello, and welcome to another episode of the All Thoughts podcast. 0:00:13.119 --> 0:00:16.000 I'm Tracy Alloway and I'm Joe wasent Thal. Joe, We're 0:00:16.000 --> 0:00:18.079 about to do something we've never done before. 0:00:19.040 --> 0:00:21.160 I'm very excited about this. This is something that I've 0:00:21.160 --> 0:00:24.040 always sort of like wanted to do, maybe even before 0:00:24.040 --> 0:00:25.759 we had a podcast, Like even since I was like 0:00:26.040 --> 0:00:30.479 a little kid watching TV and no like seeing like 0:00:30.520 --> 0:00:32.720 some like news show. Because we're going to talk to 0:00:32.840 --> 0:00:34.960 like someone disguised, right. 0:00:34.840 --> 0:00:39.080 And yes, we are going to talk to an anonymous source, 0:00:39.159 --> 0:00:43.160 an anonymous person, someone who's anonymous online but will also 0:00:43.240 --> 0:00:46.159 be doubly anonymous on this podcast, and we're going to 0:00:46.240 --> 0:00:47.640 be disguising their voice. 0:00:47.840 --> 0:00:48.640 Yeah, I'm really excited. 0:00:48.680 --> 0:00:50.080 I've always wanted to do that because you know, like 0:00:50.080 --> 0:00:52.760 those old like I don't know, like investigative. 0:00:52.040 --> 0:00:55.680 Shows where they have the shadow shadow you see the silhouette. 0:00:55.760 --> 0:00:58.560 Yeah, they sound like a robot and stuff like that, 0:00:58.680 --> 0:01:01.400 and it's like, oh, that's so cool, and you know, 0:01:01.400 --> 0:01:02.880 it's like there's no reason we can't do that. 0:01:03.320 --> 0:01:05.720 Okay, Yes, that is exactly what we're going to do. 0:01:05.920 --> 0:01:07.200 I'll just go ahead and say it. We're going to 0:01:07.240 --> 0:01:10.240 be speaking with high yield Harry, who runs a couple 0:01:10.280 --> 0:01:13.240 of different accounts on social media. He's on Twitter and 0:01:13.319 --> 0:01:16.200 also on Instagram. He also has his own newsletter where 0:01:16.240 --> 0:01:21.319 he's basically chronicling some of the craziness that happens on 0:01:21.400 --> 0:01:25.160 Wall Street in various ways. But also in the credit 0:01:25.200 --> 0:01:31.679 markets specifically, and listeners know that private credit and it's 0:01:31.720 --> 0:01:36.120 sort of differences to traditional public credit markets, So publicly 0:01:36.240 --> 0:01:41.360 issued junk bonds or leverage loans has been a topic 0:01:41.440 --> 0:01:45.160 of interest for us, but in general, credit markets are 0:01:45.200 --> 0:01:48.200 always interesting things, and we have been at a sort 0:01:48.240 --> 0:01:51.960 of interesting juncture in them where last year turned out 0:01:51.960 --> 0:01:55.080 to be a fantastic year for credit if you got 0:01:55.080 --> 0:01:58.200 in at the right time. And that is despite lots 0:01:58.200 --> 0:02:01.040 of people expecting that this would be the area where 0:02:01.080 --> 0:02:04.480 you would see the impact of higher interest rates. 0:02:04.520 --> 0:02:05.200 This was the. 0:02:05.080 --> 0:02:09.320 Frothiest area of the market in some respects, certainly leverage loans, 0:02:09.520 --> 0:02:11.320 and that would be the place where you would see 0:02:11.360 --> 0:02:15.440 trouble from the rate hikes, and yet early twenty twenty 0:02:15.440 --> 0:02:16.800 four haven't really seen that. 0:02:17.120 --> 0:02:19.360 So we talk, obviously, as you said, a lot about credit. 0:02:19.480 --> 0:02:21.520 We talk about a lot in the macro sense, where 0:02:21.600 --> 0:02:24.680 is the investor demand coming from what is the effect 0:02:24.760 --> 0:02:29.320 or not effect of higher interest rates? What is the 0:02:29.360 --> 0:02:33.040 effect of Dodd Frank and shifting lending capacity from banks 0:02:33.080 --> 0:02:35.519 to other non bank institutions, et cetera. And all that's 0:02:35.560 --> 0:02:38.120 great and all that's important, but you can't really like 0:02:38.320 --> 0:02:41.240 understand it just from the sort of like numbers without 0:02:41.320 --> 0:02:43.079 understanding like someone who would just like talk. 0:02:42.960 --> 0:02:46.200 About like the world of like actually like making the 0:02:46.240 --> 0:02:47.079 loans and making the. 0:02:47.040 --> 0:02:50.240 Deals right, the incentives that go into doing this, and 0:02:50.280 --> 0:02:53.080 like who are the players play in this market? Yes, So, 0:02:53.639 --> 0:02:56.760 without further ado, I am very pleased to say we 0:02:56.800 --> 0:03:00.440 have Highyeal Tarry with us. As mentioned, this is his 0:03:00.480 --> 0:03:02.880 real voice. I think it will be obvious when the 0:03:02.919 --> 0:03:05.880 episode comes out. But Harry, thank you so much for 0:03:05.919 --> 0:03:06.280 doing this. 0:03:06.720 --> 0:03:09.240 Yeah, Hi Tracy, Hi Joe. Thanks for having me. You know, 0:03:09.360 --> 0:03:12.720 glad to be the exception, and I'm interested in hearing 0:03:12.760 --> 0:03:16.240 how my voice is going to sound. You might might 0:03:16.280 --> 0:03:19.320 be sounding like the Riddler, you know, holding Gotham for ransom, 0:03:19.440 --> 0:03:21.280 but you know, it'll be interesting to hear how it 0:03:21.280 --> 0:03:22.120 works out. 0:03:22.440 --> 0:03:26.000 So first question, I want to give you the space to, 0:03:26.919 --> 0:03:29.520 you know, explain who you are without giving too much 0:03:29.520 --> 0:03:32.600 away and doxing yourself. But who are you and what 0:03:32.639 --> 0:03:33.040 do you do? 0:03:33.960 --> 0:03:37.600 Yeah, so I'm a junior professional within the world of 0:03:37.760 --> 0:03:41.000 public credit. Uh. You know, I did the typical stint 0:03:41.080 --> 0:03:44.640 from the cell side to credit, and I've experienced wearing 0:03:44.840 --> 0:03:48.360 wearing different hats in terms of public credit and private credit. 0:03:48.960 --> 0:03:51.280 Right now, my focus is on public credit. You know, 0:03:51.440 --> 0:03:54.680 I like the opportunity set there and I'm more of 0:03:54.720 --> 0:03:57.640 a market based individual as opposed to a deal team guy, 0:03:58.280 --> 0:04:01.360 so that that kind of me to public credit. But 0:04:01.640 --> 0:04:04.400 you know, I've dipped my toes in both and have 0:04:05.000 --> 0:04:10.000 done plenty of investment committee memos for both types of offerings. 0:04:09.640 --> 0:04:11.760 I'm really excited about this. I want to get into, 0:04:11.800 --> 0:04:14.520 you know, the world of credit and what you've seen 0:04:14.840 --> 0:04:18.400 from the inside and all of that. But now before 0:04:18.440 --> 0:04:22.440 we do, talk about like your public persona, the high 0:04:22.480 --> 0:04:27.480 Yield Harry persona on Twitter and Instagram, what prompted you 0:04:27.600 --> 0:04:32.080 to adopt this persona and what you know, what come from? 0:04:32.080 --> 0:04:33.559 And why are you one of the only good ones? 0:04:34.560 --> 0:04:37.680 You're two? Time I was I was sitting around in 0:04:38.040 --> 0:04:41.679 mid twenty twenty, COVID was going on, was in my parents' 0:04:41.680 --> 0:04:45.000 basement and you know there was a lot going on 0:04:45.120 --> 0:04:48.000 the credit markets back in like March and April, but 0:04:48.120 --> 0:04:50.680 after that it really settled down and had a lot 0:04:50.680 --> 0:04:53.120 of time on my hands after some you know, more 0:04:53.120 --> 0:04:57.360 stressful like two AM nights, and I decided I really 0:04:57.360 --> 0:05:01.320 wanted to make a finance meme account. Finance memes in 0:05:01.360 --> 0:05:05.839 particular on Instagram really originated back in like twenty seventeen, 0:05:06.400 --> 0:05:08.240 and you know, I would say that was really the 0:05:08.240 --> 0:05:11.800 golden age of finance memes. And I was really as 0:05:12.000 --> 0:05:15.520 a younger guy, enjoying all the memes coming out from 0:05:15.960 --> 0:05:19.000 all those accounts, and I noticed some of those guys 0:05:19.000 --> 0:05:21.680 are starting to post a lot less, so I figured, 0:05:21.720 --> 0:05:24.080 you know, I should try my hand at this. So 0:05:24.240 --> 0:05:27.080 I figured, you know, my my favorite show is Succession. 0:05:27.160 --> 0:05:31.160 You know, I love that show, and I figured, you know, 0:05:31.200 --> 0:05:33.800 I should, I should probably do some memes and incorporate 0:05:33.839 --> 0:05:36.760 Succession into it. And look, that got a lot of 0:05:37.320 --> 0:05:42.480 popularity early on. And you know, as as things developed 0:05:42.480 --> 0:05:45.320 in the credit markets, especially with all the M and 0:05:45.360 --> 0:05:48.039 A activity and craziness going on in like twenty twenty 0:05:48.080 --> 0:05:51.239 one and early twenty two, you know, I think people 0:05:51.360 --> 0:05:53.839 took interest in the into in the account. 0:05:54.160 --> 0:05:58.080 These are popular meme formats, but you're kind of using 0:05:58.120 --> 0:06:02.200 them to say very specific things about the credit markets 0:06:02.360 --> 0:06:04.760 at times. So what is it about the meme format 0:06:05.160 --> 0:06:09.560 that lends itself to sort of credit analysis or credit commentary. 0:06:09.640 --> 0:06:11.760 Yeah, that's a good question. I mean, it's funny how 0:06:11.839 --> 0:06:13.920 niche you can really get, like, you know, you can 0:06:14.080 --> 0:06:17.120 you can get very complex and talk about like liquidation 0:06:17.279 --> 0:06:20.159 preferences or you know, pick for like payment in kind 0:06:20.240 --> 0:06:23.520 and all these all these different nuances from the form 0:06:23.600 --> 0:06:26.760 of a of a viral meme. You know, I'm not 0:06:26.920 --> 0:06:29.680 really sure what drives that psychology, you know, I just 0:06:29.720 --> 0:06:32.279 I just know people people love it and react to 0:06:32.320 --> 0:06:36.400 it in a very unique and niche way. And you know, 0:06:36.480 --> 0:06:39.480 it's it's just really hard to like after that in 0:06:39.720 --> 0:06:43.640 a bottle, I suppose. But you know, as long as 0:06:43.640 --> 0:06:46.440 people are enjoying it and enjoying all these goofy memes 0:06:46.480 --> 0:06:49.200 and videos, and you know, I'm happy to oblige and 0:06:49.520 --> 0:06:50.360 keep the party going. 0:06:50.839 --> 0:06:53.160 You know, I've heard people say things like, you know, 0:06:53.520 --> 0:06:56.560 when you're becoming fluent in a foreign language, when you 0:06:56.640 --> 0:06:59.200 have a dream in that language, And I think there's 0:06:59.200 --> 0:07:03.080 an equivalent where it's like, you know, you actually understand 0:07:03.600 --> 0:07:06.839 an industry well when you get the jokes and the 0:07:06.880 --> 0:07:09.120 memes and the more uniche the better. And you know, 0:07:09.160 --> 0:07:11.200 it's like, because there are meme pages for like literally 0:07:11.200 --> 0:07:14.840 every industry. There's like, you know, trucking memes and then 0:07:14.920 --> 0:07:17.600 truck driver meme pages, and then freight memes and freight 0:07:17.680 --> 0:07:21.600 meme pages. It goes at broker broker meme pages, et cetera. 0:07:21.640 --> 0:07:23.040 And it's like I get someone, you know, I look 0:07:23.080 --> 0:07:24.920 at them because we've done a lot of freight, and 0:07:24.960 --> 0:07:25.560 I like get. 0:07:25.400 --> 0:07:26.040 Half the jokes. 0:07:26.080 --> 0:07:28.360 It's like, Okay, I still have more work to do. 0:07:28.560 --> 0:07:31.360 That's right. When you use the distracted boyfriend meme, it's 0:07:31.400 --> 0:07:32.840 like a proficiency certificate. 0:07:33.000 --> 0:07:33.840 Yeah, it really is. 0:07:33.880 --> 0:07:37.200 It's like, can you make a meme for an industry 0:07:37.480 --> 0:07:41.440 that the industry participants themselves find funny? And most people 0:07:41.480 --> 0:07:43.240 can't do it because they don't know enough. But like 0:07:43.320 --> 0:07:46.200 that is I do think like sort of like the 0:07:46.240 --> 0:07:50.280 test of industry domain expertise. Can you mean, can you 0:07:50.320 --> 0:07:52.280 get the memes and can you make the memes that 0:07:52.280 --> 0:07:53.480 the other people find funny? 0:07:54.160 --> 0:07:56.560 Yeah? Yeah, absolutely, Joe. And you know, I think as 0:07:56.920 --> 0:08:00.680 time has gone along, it's it's taken me a very 0:08:00.720 --> 0:08:02.680 short amount of time to make some of these memes. 0:08:02.880 --> 0:08:05.880 And you know, I wish I had a more useful skill, 0:08:06.040 --> 0:08:11.000 like a skill to economic value. But you know, I 0:08:11.920 --> 0:08:13.440 watch a lot of TV. I'll watch a lot of 0:08:13.440 --> 0:08:15.600 good TV shows and I kind of have like etched 0:08:15.640 --> 0:08:17.760 in my brain, use some of the great quotes or 0:08:17.800 --> 0:08:20.280 some of the great scenes from them, and you know, 0:08:20.360 --> 0:08:22.240 all of a sudden you might get a like no 0:08:22.360 --> 0:08:25.120 Country for Old Men or a Tomorrow meme, you know, 0:08:25.200 --> 0:08:28.120 associated with finance, and you know that's the type of 0:08:28.160 --> 0:08:31.640 stuff that like people people love out of nowhere, and 0:08:31.680 --> 0:08:35.400 you tie that to something niche and you know it'll 0:08:35.440 --> 0:08:36.000 pop off. 0:08:36.200 --> 0:08:39.400 I definitely have more questions on the social media side 0:08:39.400 --> 0:08:42.079 of things. But why don't we talk credit for a bit? 0:08:42.520 --> 0:08:44.760 You know, I'm sure you've been listening to some of 0:08:44.800 --> 0:08:47.680 the episodes that we've done where we're digging into private credit. 0:08:47.720 --> 0:08:52.280 But how would you characterize the difference between working in 0:08:52.360 --> 0:08:54.559 private credit versus working on the public side? 0:08:54.720 --> 0:08:55.000 Question? 0:08:56.280 --> 0:08:58.920 Yeah, so you know there's pros and cons in each. 0:08:59.240 --> 0:09:02.720 You know, I think with private credit, I was, I 0:09:02.760 --> 0:09:06.600 think there's higher compensation for the individuals in there, So 0:09:06.760 --> 0:09:09.440 you know, that's best one thing. But uh, you know, 0:09:09.559 --> 0:09:13.559 I think I think with private credit, you you can 0:09:13.600 --> 0:09:16.720 structure things in a lot of different ways, and you know, 0:09:16.880 --> 0:09:19.920 the the opportunity set is very large. 0:09:20.400 --> 0:09:20.600 Uh. 0:09:20.679 --> 0:09:23.160 You know, you can look at something from a lower 0:09:23.160 --> 0:09:25.600 middle market lens, middle market lens, or you can even 0:09:25.640 --> 0:09:28.080 eat and share in the broadly sy indicated loan market. 0:09:28.480 --> 0:09:31.280 You know, I think with private credit, one one thing 0:09:31.280 --> 0:09:33.199 in particular is you get you can get a lot 0:09:33.240 --> 0:09:34.760 more in the weeds. You know, you can get a 0:09:34.760 --> 0:09:38.199 lot more comprehensive data room, and you know, really get 0:09:38.240 --> 0:09:41.080 in front of the management teams, really make sure uh 0:09:41.200 --> 0:09:44.679 they're answering the questions you need. And you know, I 0:09:44.920 --> 0:09:48.920 think I think the relationship with sponsors is a lot 0:09:48.960 --> 0:09:51.800 more important in the private credit world, where you know, 0:09:51.800 --> 0:09:54.280 in private credit, a lot of our deal flow came 0:09:54.360 --> 0:09:58.520 from sponsor relationships. You know, may may come from a banker, 0:09:59.280 --> 0:10:01.520 but it also may come from a sponsor in terms 0:10:01.559 --> 0:10:04.240 of you know, we want you as the lender that 0:10:04.280 --> 0:10:07.760 we're going to work with, or you know, uh, here's 0:10:07.840 --> 0:10:10.520 ten lenders we're gonna we're gonna pick one or maybe 0:10:10.559 --> 0:10:12.959 we'll pick four, and you guys need to get a 0:10:13.040 --> 0:10:15.439 term sheet in our hands as soon as possible. Uh. 0:10:15.480 --> 0:10:17.080 You know, I think one of the cons with private 0:10:17.120 --> 0:10:21.079 credit though, is I think from a fun standpoint, you're 0:10:21.120 --> 0:10:23.840 a little more concentrated on your bets, and then there's 0:10:24.559 --> 0:10:28.959 illiquidity as well, so you know, when you really make 0:10:29.000 --> 0:10:30.559 an investment, you know, I think you need a lot 0:10:30.640 --> 0:10:34.160 higher conviction given that is, you know, it's not necessarily 0:10:34.160 --> 0:10:36.760 something you can trade out of. So flipping over to 0:10:36.800 --> 0:10:40.040 public credit from a liquidity standpoint, you know, you may 0:10:40.080 --> 0:10:44.360 have one hundred lenders within a broadly syndicated loan, and 0:10:44.440 --> 0:10:46.480 you know, if it's a billion dollar loan, you can 0:10:46.520 --> 0:10:49.480 get decent liquidity there, you know, even if it's like 0:10:49.480 --> 0:10:52.480 a B minus credit. So you know, I think I 0:10:52.480 --> 0:10:56.400 think having that liquidity is a big positive for public 0:10:56.440 --> 0:10:59.480 credit because with private credit, I think it's a lot 0:11:00.280 --> 0:11:03.520 harder to change things or have a loan change hands 0:11:03.559 --> 0:11:06.480 as things go south. But you know, the con with 0:11:06.679 --> 0:11:09.760 public credit, in contrast to what I explained with diligence 0:11:09.800 --> 0:11:11.840 in the data room and you know, getting in front 0:11:11.880 --> 0:11:14.240 of management and what have you, is you know, you 0:11:14.280 --> 0:11:16.480 get on a lot of these lender calls is a 0:11:16.480 --> 0:11:20.520 public credit guy and management will frankly, just toss your 0:11:20.600 --> 0:11:23.640 question to decide or say oh, you know, well we'll 0:11:23.640 --> 0:11:26.080 follow up with you offline about that, or you know, 0:11:26.240 --> 0:11:29.120 say oh, we're not going to disclose that for competitive reasons. 0:11:29.160 --> 0:11:32.240 And you know, some of these questions are things you 0:11:32.400 --> 0:11:36.160 need to know. Is A is a underwriting investor and 0:11:36.280 --> 0:11:39.040 it's unfortunate it doesn't get answered, but that's kind of 0:11:39.080 --> 0:11:40.960 how it's structured. And you know you'll get a data 0:11:41.040 --> 0:11:43.160 room and public credit to that's a lot more thin 0:11:44.120 --> 0:11:47.760 relative to the private credit. And then the last component 0:11:47.800 --> 0:11:50.720 too is you know documentation where you know, I think 0:11:50.800 --> 0:11:55.400 public credit we've seen this massive wave of pub light loans, 0:11:55.640 --> 0:11:59.000 you know, no maintenance covenants and you know, looser docks 0:11:59.000 --> 0:12:01.839 in terms of what a sponsor can and cannot do. 0:12:02.400 --> 0:12:06.320 I think of private credit you can get some stronger 0:12:06.760 --> 0:12:09.320 protection and you know, more more of a heads up 0:12:09.360 --> 0:12:11.080 as things go south. You know, I think, is the 0:12:11.080 --> 0:12:15.360 private credit loans get bigger, there's you know, there's looser documentation, 0:12:15.600 --> 0:12:18.360 but you know for a general middle market or or 0:12:18.480 --> 0:12:22.640 lower loan, you know, I think you're getting stronger, uh documentation. 0:12:25.920 --> 0:12:42.640 M Can I ask a definitional question, is a data 0:12:42.760 --> 0:12:46.280 room a literally a room where you walk into a 0:12:46.480 --> 0:12:50.000 sealed room and look at information and can't take it out. 0:12:50.320 --> 0:12:52.560 Or is it is that? Is it virtual? Like what 0:12:52.720 --> 0:12:54.640 is a data room? 0:12:54.840 --> 0:12:57.640 Yeah, well it's funny, you know, a data room gets 0:12:57.679 --> 0:13:00.319 gets a lot of jokes like that where people meme 0:13:00.360 --> 0:13:02.560 about it being a physical place, but it's actually more 0:13:02.559 --> 0:13:04.520 of a virtual place. You know. It could be on 0:13:04.559 --> 0:13:07.400 a website like syndtrack, or it could be on something 0:13:07.440 --> 0:13:11.480 as simplistic as dropbox, where a lot of data is 0:13:11.520 --> 0:13:16.559 inputed into an online database. So that can be financials, 0:13:16.720 --> 0:13:22.320 can be a confidential information memorandum sim you know, lender presentation, 0:13:23.200 --> 0:13:29.240 legal documents, KPIs, and just a lot of various information 0:13:30.200 --> 0:13:33.480 that helps an investor assess an investment opportunity. 0:13:33.640 --> 0:13:34.600 Can I ask your take? 0:13:34.760 --> 0:13:37.440 This is a question that comes up in every credit conversation, 0:13:37.600 --> 0:13:40.400 and I'm not always satisfied with the answers, But what 0:13:40.520 --> 0:13:44.760 is the attraction for investors to go into private credit? 0:13:45.160 --> 0:13:48.000 Because people say it's correlated, but it's like, yeah, of 0:13:48.040 --> 0:13:51.080 course it's it's like and it's like other returns are higher. 0:13:51.120 --> 0:13:52.559 But you know, as you say, it's a liquid no 0:13:52.640 --> 0:13:56.040 mark to market, how would you characterize the appetite from 0:13:56.080 --> 0:13:58.640 investors to lend via the private credit channel. 0:14:00.240 --> 0:14:03.079 Yeah, you know, I think as like sofur and base 0:14:03.160 --> 0:14:08.079 rates have has increased, you're getting a very attractive return. 0:14:08.240 --> 0:14:10.280 And then you know, I think also from the covenant 0:14:10.320 --> 0:14:15.280 standpoint as well, you know that that provides a little 0:14:15.320 --> 0:14:20.720 more structure relative to leverage learns or how you'll bonds potentially. 0:14:21.440 --> 0:14:24.040 And look, I think private equity has shifted a lot 0:14:24.040 --> 0:14:28.480 of deal flow to private credit. So naturally, if you're 0:14:28.560 --> 0:14:32.240 if you're looking to invest in credit, you know you're 0:14:32.320 --> 0:14:35.640 looking to include some private credit into that mix as well. 0:14:36.040 --> 0:14:39.760 You know, I'm still I'm still bullish on private credit. 0:14:39.760 --> 0:14:41.200 You know, I think there's a lot of smart and 0:14:41.280 --> 0:14:44.440 sophisticated investors in the space. But you know, I think 0:14:44.440 --> 0:14:46.640 I think there I think there's also a lot of 0:14:46.640 --> 0:14:50.119 deals that get done on a relationship basis. But ultimately, 0:14:51.240 --> 0:14:54.680 you know, you get pretty pretty decent double digit returns 0:14:54.880 --> 0:14:57.960 and you know you have a first lean position as 0:14:57.960 --> 0:15:00.960 opposed to an equity position, So you know, on an 0:15:01.080 --> 0:15:04.160 LTV basis, I think you're fine with with a lot 0:15:04.160 --> 0:15:05.560 of these names, talk. 0:15:05.440 --> 0:15:08.800 To us more about how a private credit deal actually 0:15:08.800 --> 0:15:13.320 comes into being versus say, a syndicated loan or something 0:15:13.400 --> 0:15:16.960 like that, because I think like the actual process by 0:15:17.000 --> 0:15:20.600 which an issuer chooses to go the public or the 0:15:20.760 --> 0:15:24.200 private route is still something I'm kind of like wrapping 0:15:24.400 --> 0:15:27.880 my head around, like what is the I guess the 0:15:27.960 --> 0:15:31.600 catalyst for going one way or another? Who's like calling 0:15:31.640 --> 0:15:34.360 the shots or who is influential in this process? 0:15:35.560 --> 0:15:37.200 Yeah, so, you know, I think a big thing I 0:15:37.200 --> 0:15:41.000 saw on private credit was people or sponsors would favor 0:15:41.040 --> 0:15:44.960 private credit in situations where banks for someone else is 0:15:45.000 --> 0:15:48.200 moving too slow and you know, they, like private equity, 0:15:48.200 --> 0:15:50.800 would want to partner that moves fast and moves quickly 0:15:50.840 --> 0:15:53.600 with them. So, you know, I think I think that's 0:15:53.640 --> 0:15:58.240 an instance where private credit can come in and you know, 0:15:58.400 --> 0:16:03.080 help provide a level of execution and certainty, which you know, 0:16:03.080 --> 0:16:06.960 I think I think is massive, you know, I I do. 0:16:07.160 --> 0:16:10.240 I do think the public credit market makes a lot 0:16:10.280 --> 0:16:13.440 of sense for a lot of these bigger issuers. But 0:16:13.440 --> 0:16:15.680 but in terms of like you know, on the smaller side, 0:16:15.800 --> 0:16:18.880 I think I think private credit comparably make makes a 0:16:18.880 --> 0:16:20.800 lot of sense. So in terms of how these how 0:16:20.840 --> 0:16:23.880 these deals end up getting done, you know, like I 0:16:24.080 --> 0:16:28.200 mentioned earlier, a lot of this is from relationships. You know, 0:16:28.280 --> 0:16:30.600 might be a banker who gives it out, but it's 0:16:30.600 --> 0:16:34.080 predominantly going to be a sponsor who's who's seeking out 0:16:34.160 --> 0:16:37.280 term sheets from from lenders. Uh. You know, in terms 0:16:37.320 --> 0:16:40.440 of assessing this, it's it's all about you know, myself 0:16:40.480 --> 0:16:43.320 as a junior person and then you know, other other 0:16:43.360 --> 0:16:45.920 people on the totem pole from like VP to director 0:16:46.080 --> 0:16:49.520 m d uh, you know, assessing the data room hot, 0:16:49.640 --> 0:16:51.440 you know, getting in front of the sponsor, make sure 0:16:51.760 --> 0:16:54.040 we're getting what we need answer before we can take 0:16:54.080 --> 0:16:59.360 this to an investment committee, you know, confirming internally whether 0:16:59.640 --> 0:17:02.400 senior individuals and the firm have have interest in continuing 0:17:02.400 --> 0:17:04.840 with the process. Uh. And and you know a lot 0:17:04.840 --> 0:17:07.920 of these a lot of these deals end up end 0:17:08.000 --> 0:17:10.000 up following a timeline where it's like, oh, you know, 0:17:10.000 --> 0:17:13.600 we already have turn sheets or indicated interests from a 0:17:13.640 --> 0:17:15.919 lot of other lenders. We need you to move fast. 0:17:16.040 --> 0:17:19.200 And part of it too is like a sponsor testing 0:17:19.240 --> 0:17:21.560 you of like you know, you you need to move 0:17:21.560 --> 0:17:23.320 fast because we want to work with the partner who 0:17:23.320 --> 0:17:26.359 will move fast with us. So you know, we we 0:17:26.480 --> 0:17:29.600 work pretty hard modeling and deal out, you know, building 0:17:29.640 --> 0:17:33.280 out like an internal memorandum which you know is our 0:17:33.960 --> 0:17:37.399 is our story for the investment, you know, detailing the transaction, 0:17:37.680 --> 0:17:40.240 the sponsor, the company, you know, getting nuts and bolts 0:17:40.280 --> 0:17:43.919 on on how on how the company works. You know, 0:17:43.960 --> 0:17:48.040 any any key risks in mitigans from like a vendor, contract, cost, structure, 0:17:48.160 --> 0:17:53.760 industry standpoint. Uh. And then you know, thinking internally how 0:17:53.840 --> 0:17:56.920 how we want to go about uh the pricing we 0:17:57.400 --> 0:18:00.359 offer and you know, and any other components and in 0:18:00.400 --> 0:18:04.040 look too, I also you know, spend some time uh 0:18:04.440 --> 0:18:06.359 you know, doing a little bit of equity as well, 0:18:06.400 --> 0:18:10.520 and you know, whether we can provide a a lending 0:18:10.560 --> 0:18:13.920 solution that's first lean in conjunction with some other lenders, 0:18:14.000 --> 0:18:16.000 or whether we want to provide something from a one 0:18:16.040 --> 0:18:20.320 stop shop situation where you're also contributing equity to help 0:18:20.640 --> 0:18:23.280 you know, really carry the deal. Is a key component 0:18:24.000 --> 0:18:26.959 when when modeling it out, when when doing research and 0:18:27.119 --> 0:18:29.879 kind of measuring returns and look from there, you go 0:18:29.920 --> 0:18:34.360 to your investment committee. You you you figure out what 0:18:34.359 --> 0:18:37.439 what needs to be addressed, whether the risks have been mitigated, 0:18:37.480 --> 0:18:40.840 and if it has been you're able to go and 0:18:41.280 --> 0:18:43.520 get an indicative term sheet out to out to a 0:18:43.560 --> 0:18:46.920 sponsor if they select you or you and another group 0:18:46.920 --> 0:18:50.560 of lenders. You know, you might find yourself in the Midwest, 0:18:50.640 --> 0:18:52.399 look like on the on the floor of like a 0:18:53.000 --> 0:18:56.960 of a widget manufacturing company and you know, working hand 0:18:57.000 --> 0:19:01.080 in hand with legal the sponsor to to you know, 0:19:01.160 --> 0:19:05.680 really assess the deal and make sure it it closes, 0:19:05.760 --> 0:19:08.720 and you know you feel very comfortable and have a 0:19:08.760 --> 0:19:10.080 strong conviction in your deal. 0:19:10.320 --> 0:19:12.600 Were you ever involved in a deal where you had 0:19:12.600 --> 0:19:15.119 to take back the keys, as they say, and like 0:19:15.320 --> 0:19:19.280 you know, you end up running the widget manufacturer accidentally? 0:19:19.560 --> 0:19:21.520 No, I haven't, And I think I think that's a 0:19:21.560 --> 0:19:25.919 function of the current credit environment where things are still okay, 0:19:26.119 --> 0:19:28.800 you know, if we've had a massive rise in interest rates, 0:19:28.840 --> 0:19:30.679 I think it takes a while for that to like 0:19:31.400 --> 0:19:34.199 filter out. I think those taking the key situations are 0:19:34.240 --> 0:19:37.280 going to be an interesting storyline over the next few years, 0:19:37.320 --> 0:19:39.840 you know, I think maybe to get ahead of myself, 0:19:39.880 --> 0:19:42.960 you know, I think pick and payment in kind is 0:19:43.320 --> 0:19:45.280 a way right now for a lot of sponsors and 0:19:45.400 --> 0:19:48.760 lenders to address some of these you know, twenty twenty 0:19:48.840 --> 0:19:53.080 one or deals like that that that were a little 0:19:53.119 --> 0:19:56.399 weaker and you know, give it a little bit of 0:19:56.400 --> 0:19:59.520 of a longer timeline to run. So you know, I 0:19:59.520 --> 0:20:03.320 think the moment we're we're we're going to see less 0:20:03.440 --> 0:20:06.639 key taking situations. You know, I feel I feel a 0:20:06.640 --> 0:20:09.200 little comfortable with twenty four. It's just going to be interesting, 0:20:10.240 --> 0:20:12.560 you know, in twenty twenty five and onwards, how many 0:20:12.760 --> 0:20:14.440 key taking situations we get? 0:20:15.160 --> 0:20:18.600 Yeah? What do you think also about some of the 0:20:18.600 --> 0:20:22.840 big investment banks now getting into private credit, because this 0:20:22.880 --> 0:20:25.639 seems to be the irony, right, It's like private credit 0:20:26.080 --> 0:20:29.280 kind of became a thing because banks were retrenching from 0:20:29.400 --> 0:20:31.879 lending or it was harder for them to lend. But 0:20:32.000 --> 0:20:35.280 now they're getting into it, and also like they're sort 0:20:35.320 --> 0:20:39.000 of competing with I guess their own syndicated bond and 0:20:39.080 --> 0:20:41.159 loan businesses. It just seems kind of funny. 0:20:41.880 --> 0:20:44.160 Yeah, it's a little bizarre because it's pretty much balance 0:20:44.200 --> 0:20:49.040 sheet lending. So you know, it's it's a little interesting. 0:20:49.240 --> 0:20:53.440 You know. I I have a harder time imagining, you know, 0:20:54.080 --> 0:20:57.639 banks wanting to hold on to a lot of debt. 0:20:57.800 --> 0:21:00.159 You know, I think I think the syndication market it 0:21:00.200 --> 0:21:03.800 works works really well from like a risk management standpoint, 0:21:04.600 --> 0:21:06.280 but it'll be you know, it'll be interesting to see 0:21:06.280 --> 0:21:09.200 how how it develops. And you know, I don't even 0:21:09.280 --> 0:21:11.040 know if I want to call it private credit if 0:21:11.040 --> 0:21:12.959 it's a bank doing right, it's just kind of like 0:21:13.200 --> 0:21:14.320 it's kind of like bank lending. 0:21:14.600 --> 0:21:17.360