WEBVTT - Private Credit, Silvergate, Apple, and the Latino Vote 0:00:00.760 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.400 at Bloomberg dot com slash podcast. If you want to 0:00:21.400 --> 0:00:24.280 talk Wall Street, why not? That's one of my favorite topics. 0:00:24.320 --> 0:00:26.360 We can roundtable this seing at this A lot going 0:00:26.400 --> 0:00:28.600 on the street as always, and we want to bring 0:00:28.640 --> 0:00:31.080 together some of the smartest minds we have on all 0:00:31.120 --> 0:00:33.400 things Wall Street. We do that with Shanalie Bassett Bloomberg 0:00:33.440 --> 0:00:35.839 News and Alison William She's a senior banks analyst at 0:00:36.000 --> 0:00:39.240 Bloomberg Intelligence. Shanali joins us here in our Bloomberg Interactive 0:00:39.280 --> 0:00:42.080 Broker studio, and Alison joins us on the phone. SHINALI 0:00:42.400 --> 0:00:44.000 a lot of news coming out of the street over 0:00:44.040 --> 0:00:46.720 the last few days. I want to focus just on headcount. 0:00:47.560 --> 0:00:50.120 What are the banks doing these days? I mean, deal 0:00:50.159 --> 0:00:53.040 flow in twenty twenty two very tough to come by. 0:00:53.080 --> 0:00:56.840 Trading better, but deal flow tough to come by. Same 0:00:56.960 --> 0:00:59.920 kind of year to date. I'm kind of surprised I 0:01:00.080 --> 0:01:03.040 haven't seen bigger layoffs. What are you hearing from your 0:01:03.040 --> 0:01:06.240 context on the street? Listen, A lot of these bankers 0:01:06.360 --> 0:01:09.840 say that there's pent up demand. Big corporations want to 0:01:09.840 --> 0:01:13.120 do strategic things, but they're strapped on money, number one, 0:01:13.200 --> 0:01:15.200 and they're also strapped on the ability to make these 0:01:15.240 --> 0:01:18.800 really big strategic decisions in the middle of so much uncertainty, 0:01:18.880 --> 0:01:21.560 particularly with a pace of interest rate increases in the 0:01:21.640 --> 0:01:24.640 United States. So with that uncertainty, they don't want to 0:01:24.720 --> 0:01:28.480 lay people off because things would come back, but they 0:01:28.480 --> 0:01:30.320 have not. They don't look like they're going to come 0:01:30.319 --> 0:01:32.600 back in full force anytime soon. So they're finding other 0:01:32.600 --> 0:01:36.200 things to do because they expect that things like activism 0:01:36.240 --> 0:01:40.480 will force spinoffs. Remember places like Elliott Paul Singer has 0:01:40.520 --> 0:01:43.240 raised record amounts of money, so there's a chance that 0:01:43.319 --> 0:01:46.240 they can do other things. You know. I don't even 0:01:46.240 --> 0:01:48.040 know where to begin on the Wall Street beat, just 0:01:48.080 --> 0:01:50.320 because I feel like this week has been literally drinking 0:01:50.360 --> 0:01:52.840 out of a fire hose or attempting to at least 0:01:53.000 --> 0:01:55.120 with the Wall Street story. But one of the most 0:01:55.280 --> 0:01:58.600 read on the Bloomberg terminal stories today is JP Morgan 0:01:59.160 --> 0:02:02.480 and blaming Just Staley for their tides with Epstein, demanding 0:02:02.520 --> 0:02:06.840 eight years of pay. Walk us through the story. Of course, 0:02:06.840 --> 0:02:08.919 it's of interest a lot, not just for Wall Street audience, 0:02:08.960 --> 0:02:11.560 but everyone that's been following the story. Yeah, and this 0:02:11.600 --> 0:02:13.839 has been going on for a while, but really it's 0:02:13.919 --> 0:02:16.080 hit a new climax, if you will, where you have 0:02:16.200 --> 0:02:19.239 JP Morgan suing Jeff Staley, who is a former Jamie 0:02:19.240 --> 0:02:23.440 Diamond protege, a star banker, former CEO of Barclays. JP 0:02:23.600 --> 0:02:26.280 Morgan itself was sued a couple of times over the 0:02:26.480 --> 0:02:29.919 Epstein debacle because Epstein, Jeffrey Epstein, was a client of 0:02:30.000 --> 0:02:32.880 the bank. And now what you have Jamie Diamond and 0:02:32.960 --> 0:02:37.519 JP Morgan really doing now is really separating themselves from 0:02:37.600 --> 0:02:39.920 Jeff Staley's own actions within the bank. And I would 0:02:39.960 --> 0:02:43.000 say that Just Staley himself has really denied a lot 0:02:43.040 --> 0:02:46.880 of the allegations against him. The suit spot forward against 0:02:46.960 --> 0:02:50.280 JP Morgan were from the US Virgin Islands, which has 0:02:50.320 --> 0:02:53.079 been leading a lot of this litigation when it comes 0:02:53.120 --> 0:02:56.560 to Just Dally and Jeffrey Epstein, as well as a 0:02:56.639 --> 0:02:59.280 woman identified by Jane Doe who says she was a 0:02:59.360 --> 0:03:03.000 victim of Jeffrey Epstein so very closely watched Saga and 0:03:03.120 --> 0:03:05.840 Tokuti's point, a lot of money at stake. Yeah, absolutely. 0:03:06.480 --> 0:03:10.280 As Alison Williams Bloomberg Intelligence, what are your thoughts, Allison, 0:03:10.400 --> 0:03:13.440 as you talk to all these big banks that you've 0:03:13.480 --> 0:03:16.239 covered for for decades, what did they think about twenty 0:03:16.280 --> 0:03:19.040 twenty three. Is there going to be any meaningful rebound 0:03:19.480 --> 0:03:21.600 in activity there? I know the trading business has been 0:03:21.639 --> 0:03:24.840 pretty solid, but the advisory business and some of the 0:03:25.000 --> 0:03:28.440 capital raising business has not. Yeah, that's been I think 0:03:28.480 --> 0:03:32.040 the disappointment to start the year. And to Hinali's point, 0:03:33.120 --> 0:03:35.960 I think that most of the banks were sort of 0:03:36.520 --> 0:03:38.880 bank or hoarding. I guess, as we say, not willing 0:03:38.880 --> 0:03:42.520 to let go of all the bankers after they had 0:03:42.560 --> 0:03:46.160 to quickly do all these hires in twenty twenty one, 0:03:46.280 --> 0:03:50.480 and so they're a little bit reticent to start doing cutbacks. 0:03:50.600 --> 0:03:53.200 There was a lot of hope, and I think the 0:03:53.240 --> 0:03:55.880 disappointing thing is that even though the markets were sort 0:03:55.920 --> 0:03:59.160 of have had a strong rally or had a strong 0:03:59.240 --> 0:04:02.200 rally going, you know, starting at the end of last 0:04:02.240 --> 0:04:07.520 year into January, the IPO issuance has still been really dismal. 0:04:07.720 --> 0:04:10.240 M and A is really dismal, and so I think 0:04:10.520 --> 0:04:12.680 that's why you're starting to see some things bubble up. 0:04:12.760 --> 0:04:17.800 This is normally the strongest seasonal quarter, and I think, 0:04:17.920 --> 0:04:22.360 you know, what we really need is clarity on the 0:04:22.600 --> 0:04:25.840 macro environment. So even though the stocks have rallied, some 0:04:25.920 --> 0:04:28.039 of the expectations for those who want to come to 0:04:28.120 --> 0:04:31.440 market are still a little bit too high, and they've 0:04:31.480 --> 0:04:34.400 been and they've been hazard into sort of execute. So 0:04:34.800 --> 0:04:38.160 the pipelines are still there, but equity M and A disappointing. 0:04:38.200 --> 0:04:41.120 The one bright spot, if you will, has been in 0:04:41.160 --> 0:04:43.760 the debt capital markets business. We heard from City Group 0:04:43.920 --> 0:04:47.320 yesterday they're expect you know, the industry while it's down 0:04:47.360 --> 0:04:51.479 about forty percent in the first quarter. So that's that's 0:04:51.480 --> 0:04:54.039 better than the down fifty percent that we've been seeing, 0:04:54.080 --> 0:04:57.320 but only modestly and has to do with comparisons. But 0:04:57.400 --> 0:04:59.560 the one bright spot is the debt issuance. We have 0:04:59.680 --> 0:05:03.800 seen some companies coming to market, especially on the investment rate. 0:05:03.839 --> 0:05:05.719 I want to piggyback off of what Alison is saying 0:05:05.760 --> 0:05:08.200 because there's one deal that's being talked about today that 0:05:08.360 --> 0:05:11.760 is kind of hot, and that is the Uber leverage loan. Remember, 0:05:11.880 --> 0:05:15.440 Morgan Stanley is really leading that. Uber's a long time 0:05:15.520 --> 0:05:17.760 client and Morgan Stanley it's trading at thirty four dollars 0:05:17.800 --> 0:05:21.159 to share, remember when public closer to forty. So really 0:05:21.200 --> 0:05:24.160 this has been a tough trade. But Morgan Stanley, you know, 0:05:24.200 --> 0:05:26.600 as a lead underwriter and now is helping bring a 0:05:26.720 --> 0:05:29.320 leverage loan offering back to the table. They had a 0:05:29.400 --> 0:05:32.960 leverage loan offering last month that had seemingly high demand. 0:05:33.520 --> 0:05:37.279 You can see it, Paul, investors are still searching for yield. 0:05:38.200 --> 0:05:41.520 I am dying to know how this plays out. But 0:05:41.600 --> 0:05:43.479 remember Morgan Stanley is also hung with a lot of 0:05:43.480 --> 0:05:46.720 that Twitter debt, so it's meaningful to watch them come 0:05:46.720 --> 0:05:48.640 out in the market again with a company like Uber. 0:05:48.720 --> 0:05:50.760 Can we just take a moment to appreciate Uber and 0:05:50.760 --> 0:05:54.479 the Uber news today because in this story, Ridehilling Company 0:05:54.560 --> 0:05:58.000 looking to raise seven hundred and sixty million dollars from 0:05:58.040 --> 0:06:02.000 that sale, and that's separate from them considering to spend 0:06:02.000 --> 0:06:05.680 off their freight logistics division. So interesting stuff going on 0:06:05.720 --> 0:06:08.400 over at Uber. Well, let's bring it back to the 0:06:08.400 --> 0:06:11.600 banks if we can. Allison tell us a little bit 0:06:11.680 --> 0:06:15.039 about the trade here, because it feels fairly intuitive that 0:06:15.080 --> 0:06:19.000 if you were looking at higher rates for the economy, 0:06:19.279 --> 0:06:22.400 six percent, I believe is now the base keys for 0:06:22.440 --> 0:06:24.640 a lot of economists out there, not the consensus yet, 0:06:24.640 --> 0:06:27.839 but we're getting there. Does the automatic translation for the 0:06:27.880 --> 0:06:33.359 bank sector simply mean more interest profit? So that's what 0:06:33.440 --> 0:06:35.920 it's meant so far. So rising rates has been really 0:06:35.960 --> 0:06:38.360 a boon to the net interest income. But I think 0:06:38.400 --> 0:06:40.719 the damper that we're going to see in twenty twenty 0:06:40.720 --> 0:06:43.200 three is that the cost side of the equation now 0:06:43.279 --> 0:06:45.960 is starting to go up. So in the early days 0:06:46.080 --> 0:06:49.080 rising from zero interest rates, that we got the lift 0:06:49.160 --> 0:06:52.440 on the yield side of the equation, and that's really 0:06:52.440 --> 0:06:55.880 been strong, and bangs really haven't had to sort of 0:06:56.279 --> 0:06:58.320 lift their deposits rates because we were coming off of 0:06:58.400 --> 0:07:00.599 such a low base. But now we are seeing that. 0:07:00.640 --> 0:07:03.120 We started to see that sort of late last year, 0:07:03.160 --> 0:07:04.880 and we think we're going to continue to see that 0:07:05.680 --> 0:07:08.400 this year. I think that's sort of well understood at 0:07:08.400 --> 0:07:11.360 this point in terms of the expectations for a net 0:07:11.400 --> 0:07:14.920 interest income. But it's really you know, the credit losses 0:07:15.600 --> 0:07:17.440 side of the equation, the long growth side of the 0:07:17.480 --> 0:07:22.480 equation that investors are focusing on and then you know, 0:07:22.520 --> 0:07:25.240 looking at interest rates, I think that you know, what 0:07:25.240 --> 0:07:27.520 we've heard from managements is we really do need the 0:07:27.560 --> 0:07:31.880 FED to stop hiking, to get sort of more economic, 0:07:32.360 --> 0:07:34.480 to get a little bit more certainty on where the 0:07:34.520 --> 0:07:37.080 economy is going. You know, Alison, if I were starting 0:07:37.080 --> 0:07:39.040 my career overget on Wall Street as a young person, 0:07:39.040 --> 0:07:41.640 I'd go right the private equity That's just where I 0:07:41.640 --> 0:07:44.840 think some amazing returns can still be had. What's your outlook, 0:07:44.880 --> 0:07:47.119 you know, give us a kind of for the private 0:07:47.120 --> 0:07:49.880 equity business, and then over the next twelve to eighteen months. Yeah, 0:07:49.920 --> 0:07:52.760 so private equity, you know they have I mean, the 0:07:52.800 --> 0:07:55.960 amount of money they have raised has been incredible, Even 0:07:56.040 --> 0:07:59.240 those managements have become you know, a little bit more hesitant. 0:07:59.320 --> 0:08:02.800 But it's really I mean within private markets, it's really 0:08:02.800 --> 0:08:06.040 the private credit side where we've seen some of the 0:08:06.040 --> 0:08:10.280 biggest boom in turns of fundraising, and we expect that 0:08:10.400 --> 0:08:13.920 to continue this year. To your point, a little bit 0:08:13.920 --> 0:08:16.680 more activity going on on that side of things versus 0:08:17.280 --> 0:08:21.160 versus the trading desks, where we're expecting to see lower 0:08:21.200 --> 0:08:24.440 revenue again compared to last year. All right, good stuff, 0:08:24.600 --> 0:08:26.960 A little Wall Street round table. There. We do that 0:08:27.000 --> 0:08:30.200 with Shinali Basset of Bloomberg News and Alison Williams and 0:08:30.240 --> 0:08:32.480 Bloomberg Intelligence. She covers the banks. She's been doing that 0:08:32.600 --> 0:08:36.600 for decades here Bloomberg and then before that at Morgan 0:08:36.640 --> 0:08:39.680 Stanley Investment Management where they were big shareholders a lot 0:08:39.760 --> 0:08:42.240 of the big financial institutions. So we'd love to get 0:08:42.280 --> 0:08:47.520 her perspective here. Well, we're just talking to Alison Williams 0:08:47.520 --> 0:08:50.559 and Bloomberg Intelligence since she was talking about deal flow 0:08:50.640 --> 0:08:53.760 really being slow, and I guess that happens when interest 0:08:53.840 --> 0:08:55.440 rates rise, it gets a little bit more expensive to 0:08:55.480 --> 0:08:58.199 get deals done. Let's talk to somebody who's actually right 0:08:58.360 --> 0:09:01.240 in it, Hip Deep Randy Swimmer. He's co head of 0:09:01.240 --> 0:09:05.679 senior Lending and senior managing director Churchill Asset Management, and Randy, 0:09:05.720 --> 0:09:07.320 we like to talk to you about kind of what's 0:09:07.320 --> 0:09:09.680 going on in the deal flow world. You know, mid 0:09:09.679 --> 0:09:12.480 market deals, not necessarily the ones the big blockbusters, but 0:09:12.640 --> 0:09:15.040 a lot of the bid market deals that really rely 0:09:15.160 --> 0:09:18.520 on senior lending, leverage, lending, all that kind of stuff 0:09:18.559 --> 0:09:21.079 that you guys do. There's a bunch of private credit 0:09:21.120 --> 0:09:23.600 folks out there that are putting money into the space, 0:09:24.200 --> 0:09:26.520 it's kind of tough to get deals done, I guess 0:09:26.559 --> 0:09:29.600 when interest rates aren't zero. So talk to us about 0:09:29.640 --> 0:09:33.120 what you're seeing in the marketplace. So, yeah, January was 0:09:33.200 --> 0:09:36.480 actually a busy month. We actually led ten deals. That 0:09:36.640 --> 0:09:38.960 was the most of any direct lender in January. Now 0:09:38.960 --> 0:09:42.040 it was one month February busy as well, having gotten 0:09:42.040 --> 0:09:45.000 the final numbers. Yet, what we're seeing is that general 0:09:45.080 --> 0:09:47.960 flow to your point in M and A is off 0:09:48.000 --> 0:09:51.680 from last year at this time, part because of what's 0:09:51.720 --> 0:09:54.200 going on with interest rates, in part because of the 0:09:54.280 --> 0:09:56.400 lack of a straight line at the FED. I. You know, 0:09:56.480 --> 0:09:59.360 we all got thinking, hey, seventy five, fifty twenty five, 0:09:59.400 --> 0:10:01.120 they're going to do twenty five again and then maybe 0:10:01.120 --> 0:10:05.360 hold off all of a sudden years floating fifty basis points. 0:10:05.440 --> 0:10:07.960 That's a little bit of a surprise. Maybe he's just 0:10:08.040 --> 0:10:12.680 trying to be job on the market down. But generally speaking, 0:10:12.720 --> 0:10:16.080 in private credit and private equity, the capital is long term, 0:10:16.240 --> 0:10:19.000 and these private equity sponsors that we work with, and 0:10:19.080 --> 0:10:22.640 in general indirect lending have raised capital over a long 0:10:22.679 --> 0:10:25.680 period of time with strategies that are not short term. 0:10:25.920 --> 0:10:29.240 So they have in their pipeline deals that they've been 0:10:29.240 --> 0:10:31.720 working on for months and months and months, and they're 0:10:31.760 --> 0:10:35.160 coming to us increasing numbers now as they get the 0:10:35.200 --> 0:10:37.080 sense that the economy is strong. Because one of the 0:10:37.080 --> 0:10:39.959 things that people are missing is how strong businesses are 0:10:40.000 --> 0:10:45.520 that are in defensive sector. So healthcare, technology, software. Our portfolio, 0:10:45.559 --> 0:10:50.160 which is mostly defensive, is up revenue wise the entire 0:10:50.200 --> 0:10:55.160 portfolio thirty percent over last year, cash flows a little 0:10:55.240 --> 0:10:59.320 less twenty nine percent. What's driving that is these businesses 0:10:59.320 --> 0:11:02.200 that are more to be are in a very different 0:11:02.200 --> 0:11:07.160 slip stream than consumer focused high cap acts in some 0:11:07.320 --> 0:11:10.920 areas with high commodity costs or high wage costs. Those 0:11:10.960 --> 0:11:13.520 businesses are really driving the economy right now. They're driving 0:11:13.800 --> 0:11:17.240 job growth as we've seen with wage pressures. And I 0:11:17.280 --> 0:11:21.560 think in general that part of the business defensive sectors 0:11:21.640 --> 0:11:24.400 the private equity sponsors are focused on is going to 0:11:24.400 --> 0:11:26.920 be very active this year. Now. M and A flow 0:11:27.120 --> 0:11:29.520 will be short of what it was last year because 0:11:29.600 --> 0:11:32.160 last year, a year ago, we had zero interest rates. 0:11:32.240 --> 0:11:35.600 Amazingly right we kid hadn't started raising yet. But I 0:11:35.640 --> 0:11:38.319 think the other thing that's going on is the sellers 0:11:38.320 --> 0:11:41.120 of these companies are looking just like if you're going 0:11:41.160 --> 0:11:43.199 to sell your apartment and you're looking at the right price. 0:11:43.760 --> 0:11:46.040 They're saying, you know what, get all the papers ready, 0:11:46.400 --> 0:11:48.160 get my mortgage papers ready to get it all ready 0:11:48.200 --> 0:11:50.760 to go, and then if I've seen opening, I'm going 0:11:50.800 --> 0:11:52.960 to go for it. So I think the second half 0:11:53.000 --> 0:11:56.040 of the year is poised for a huge rebound. Well, 0:11:56.080 --> 0:11:57.800 how does that kind of square with say M and 0:11:57.880 --> 0:11:59.679 A activity, for example, it feels like a lot of 0:11:59.720 --> 0:12:04.080 the price deals lately have been driven by acquisitions. Yes, 0:12:04.559 --> 0:12:08.559 and I think that is a tried and true technique 0:12:08.559 --> 0:12:11.640 that private ape sponsors have to build these businesses up. 0:12:12.160 --> 0:12:14.240 The M and A flow, as I mentioned, is slower, 0:12:14.280 --> 0:12:17.480 but I think what's going on is there's a sense 0:12:18.000 --> 0:12:20.679 of what can we need, what we need to do 0:12:20.720 --> 0:12:22.400 if we have to finance these businesses. Paul, to your 0:12:22.480 --> 0:12:26.160 question about interest rates, So let's say they raise another 0:12:26.160 --> 0:12:28.080 fifty basis points. That gets you to five and a 0:12:28.160 --> 0:12:31.640 quarter from four to seventy five. You know, the average 0:12:31.840 --> 0:12:33.959 FED funds rate of the last sixty years was five 0:12:34.000 --> 0:12:35.640 and a half, so even we're not even at the 0:12:35.920 --> 0:12:38.640 at the average yet June of two thousand and seven 0:12:38.800 --> 0:12:41.120 it reached five and a half percent, so we're not 0:12:41.200 --> 0:12:43.319 quite at that point, I don't think. And by the way, 0:12:43.320 --> 0:12:45.600 the economy is in much better shape today than it 0:12:45.720 --> 0:12:48.040 was back then, and the banks are in much better shape. 0:12:48.400 --> 0:12:50.880 So that's the other thing that's going on. The private sector. 0:12:51.240 --> 0:12:54.480 Direct lenders are taking huge share from the banks right now. 0:12:54.520 --> 0:12:58.240 We just did the numbers, sixty one by ratio of 0:12:58.240 --> 0:13:01.559 sixty one to four, direct enders are doing more deals 0:13:01.679 --> 0:13:04.560 than the banks are doing year to date. That's a 0:13:04.640 --> 0:13:07.880 fifteen to one margin, okay. So what it means is 0:13:07.920 --> 0:13:10.200 for the deals that are getting done, even though the 0:13:10.280 --> 0:13:14.360 volume is half, folks like Churchill are doing them. So actually, 0:13:14.400 --> 0:13:17.040 our investors and by the way, I've done the tour 0:13:17.120 --> 0:13:19.280 in the last month since I saw you last of 0:13:19.320 --> 0:13:21.000 these sort of capitals of the world, so as in 0:13:21.000 --> 0:13:24.640 Tokyo's in Munich and last week this past week, I 0:13:24.760 --> 0:13:28.440 was in Baltimore, Okay. And our clients are seeing two things. 0:13:28.480 --> 0:13:31.360 One how's the portfolio holding up with the higher interest rates? 0:13:31.360 --> 0:13:33.840 And two what's going to happen with deal flow? Are 0:13:33.880 --> 0:13:37.000 you going to give me continue to invest my money? 0:13:37.559 --> 0:13:39.760 On the deal flows side, we're saying yeah, we're actually 0:13:39.840 --> 0:13:42.800 seeing based on January and early returns on February we're 0:13:42.800 --> 0:13:46.680 seeing plenty of flow on the portfolios side. What's interesting 0:13:46.800 --> 0:13:49.439 is because these defensive sectors or businesses that are actually 0:13:49.520 --> 0:13:52.600 doing well, we're actually seeing more upgrades in our portfolio 0:13:52.640 --> 0:13:55.680 than downgrades, and the performance of these businesses continues to 0:13:55.720 --> 0:13:58.240 be strong. Now, we did a proform of study of 0:13:58.280 --> 0:14:01.240 the portfolio if the FED goes to six percent, and 0:14:01.360 --> 0:14:05.080 we found that if you perform at that, interest coverage 0:14:05.080 --> 0:14:08.640 still remains solid around two times. I asked my portfolio 0:14:08.679 --> 0:14:11.160 menasor okay, and this was a question investor had, all Right, 0:14:11.400 --> 0:14:13.959 how many of your companies will be below one time 0:14:14.240 --> 0:14:17.080 interest coverage? And the answer was, on a perform at 0:14:17.080 --> 0:14:20.280 basis only one percent. That's pretty strong, Okay. That means 0:14:20.320 --> 0:14:22.680 that a very small number of those companies will not 0:14:22.760 --> 0:14:24.440 make their interests. Now. Of course they're going to be 0:14:24.520 --> 0:14:27.720 growing the meantime, so we're not worried. But this is 0:14:27.880 --> 0:14:30.760 I think there's there's a glass half full approach here 0:14:30.760 --> 0:14:33.320 that we're taking that we're seeing, which we're getting the 0:14:33.320 --> 0:14:35.360 message out to our investors that we've actually think this 0:14:35.440 --> 0:14:37.200 is a good time to be in private credit. All right, 0:14:37.200 --> 0:14:39.400 So if I you know, back when interest rates for zero, 0:14:39.440 --> 0:14:41.600 i'd come to Churchill Asset Management, I give you my 0:14:41.640 --> 0:14:44.600 money because you guys would get me yield. Now I 0:14:44.600 --> 0:14:47.000 can park my money into your treasury and get five percent. 0:14:47.760 --> 0:14:50.160 What does that do to your capital raising? Yeah, you 0:14:50.200 --> 0:14:53.400 can do that. You know, we don't view private credit 0:14:53.440 --> 0:14:56.360 as a timing issue because we've been getting seven percent 0:14:56.520 --> 0:15:00.120 year in, year out as a as an unlevered return 0:15:00.120 --> 0:15:04.280 for investors for seventeen years. It's up now, no question 0:15:04.320 --> 0:15:07.040 about it. And what we're telling investors and they're asking 0:15:07.040 --> 0:15:08.920 this like, you know, well if we come in now, 0:15:09.560 --> 0:15:13.400 you know, are we missing out on to your point, 0:15:13.400 --> 0:15:17.120 corporate investment? Great bonds? The challenge with bonds right now 0:15:17.200 --> 0:15:19.480 is that what happens if interest rates continue to go up? 0:15:19.480 --> 0:15:21.160 What if the Fed pushes rates up higher and new 0:15:21.200 --> 0:15:23.920 buy bonds. Now, the other thing that I'm hearing is 0:15:23.960 --> 0:15:27.480 that the risk premium is not there in a lot 0:15:27.520 --> 0:15:29.960 of the corporate bond market because it's if you get 0:15:30.000 --> 0:15:32.920 five percent on treasuries, you're only getting six percent on corporates. 0:15:33.120 --> 0:15:36.200 Is that enough? So if you play this private credit 0:15:36.240 --> 0:15:39.360 game with senior loans, it's twelve percent. You know, that's 0:15:39.360 --> 0:15:41.160 first of all, it's floating rates. So if rates keep 0:15:41.160 --> 0:15:43.280 going up, you're going to do better. Second of all, 0:15:43.440 --> 0:15:45.720 it's not correlated to the rest of the market. If 0:15:45.760 --> 0:15:49.720 we have supervolatility in the second third quarter. I'd like 0:15:49.840 --> 0:15:51.720 to think of private credit as kind of the noise 0:15:51.840 --> 0:15:56.800 cancelation headphones for the capital markets. Whatever is going on 0:15:56.840 --> 0:15:59.280 the markets, you're not going to feel that because these 0:15:59.280 --> 0:16:03.600 are again long term capital no ratings, the marks are 0:16:03.640 --> 0:16:06.560 private and so that stability is the kind of thing 0:16:06.560 --> 0:16:09.520 that these investors from based on my tour of those capitals, 0:16:09.840 --> 0:16:12.840 are really asking for. All right, good stuff. Randy really 0:16:12.840 --> 0:16:15.040 appreciate chatting with you get a good sense of what's 0:16:15.080 --> 0:16:16.920 going on out there in a private credit business. And 0:16:16.960 --> 0:16:19.440 we talk about private equity, but as Matt and I 0:16:19.440 --> 0:16:21.000 have been saying, as we've been talking to Randy for 0:16:21.360 --> 0:16:24.800 a while here, the private credit space is just so 0:16:24.920 --> 0:16:27.200 active and it's just amazing to me how quickly that 0:16:27.240 --> 0:16:29.680 business has grown. And Randy had some good stats there. 0:16:29.760 --> 0:16:32.480 Randy Swimmer, he's co head of senior lending and he's 0:16:32.480 --> 0:16:36.320 the senior managing director at Churchill Asset Management. Private credit 0:16:36.720 --> 0:16:39.480 lending to private equity firms a lot of times who 0:16:39.480 --> 0:16:41.800 are getting deals done in the mid market space a 0:16:41.800 --> 0:16:43.600 lot of opportunity that I think for a lot of 0:16:43.600 --> 0:16:45.920 people maybe flies under the radar a little bit, but 0:16:45.920 --> 0:16:47.800 they've been getting great returns for a long time and 0:16:47.800 --> 0:16:51.560 it's just an interesting part of the market. So we 0:16:51.680 --> 0:16:53.000 like to check in with Randy every once in a a 0:16:53.040 --> 0:16:58.240 while and he comes into our Bloomberg Interactive Broker studio. Well, 0:16:58.280 --> 0:17:01.360 there's a long way to go until the next presidential election, 0:17:01.440 --> 0:17:06.240 but many political organizations are already ramping up efforts. In particular, 0:17:06.560 --> 0:17:09.680 some are focusing on the Latino vote and working out 0:17:09.680 --> 0:17:12.399 the best approach to electoral issues that matter most to 0:17:12.440 --> 0:17:15.600 this growing population. Let's get more on that effort now 0:17:15.640 --> 0:17:20.640 and a special report from Bloomberg's Lisa Mateo. The political 0:17:20.680 --> 0:17:23.879 divide among Latino voters is seeing a subtle shift to 0:17:23.920 --> 0:17:27.719 the Grand Old Party. Exit polls from twenty twenty two 0:17:27.800 --> 0:17:32.000 showed Democrats one about sixty percent of Latino's overall down 0:17:32.040 --> 0:17:35.919 from sixty five percent in twenty twenty, and with Latinos 0:17:35.920 --> 0:17:39.400 making up more than thirty million of the country's registered voters, 0:17:39.440 --> 0:17:42.960 the push to capture their support continues to grow. There 0:17:43.080 --> 0:17:47.320 is now a microscope on our community that has not 0:17:47.480 --> 0:17:52.520 existed before. Yvonne Gautierrez is managing director for Latino Victory, 0:17:52.880 --> 0:17:57.520 an organization dedicated to building political power in the Latino community. 0:17:57.640 --> 0:18:01.200 Because in twenty twenty, we did see some small county 0:18:01.480 --> 0:18:05.200 and regions, you know, that did have a hired Republican 0:18:05.280 --> 0:18:09.200 turnout vote, but that was not emblematic really across the board. 0:18:09.400 --> 0:18:14.040 Democratic Congressman Henry Kuaiyar, who recently won Texas' twenty eighth district, 0:18:14.119 --> 0:18:16.760 says Republicans have been making a genuine play for the 0:18:16.840 --> 0:18:20.040 Latino vote. I have not seen this in the younger 0:18:20.040 --> 0:18:23.119 George Boursh and then Trump and then of course the 0:18:23.280 --> 0:18:28.720 National Republicans certainly did that this last election. While there 0:18:28.840 --> 0:18:31.359 wasn't a red wave in the twenty twenty two midterms, 0:18:31.560 --> 0:18:35.400 Republican Governor ron DeSantis turned heads when he won Florida's 0:18:35.440 --> 0:18:40.000 heavily Latino counties of Miami, Dade, and Osciola. Ronnie Lucetto 0:18:40.240 --> 0:18:44.560 National Chairman for the Republican National Hispanic Assembly says DeSantis's 0:18:44.640 --> 0:18:48.360 stance on COVID lockdowns helped they temporarily lockdown and then 0:18:48.359 --> 0:18:50.359 opened up immediately and kind of let everybody kind of 0:18:50.400 --> 0:18:52.480 live their life and make their own decisions into the 0:18:52.560 --> 0:18:55.760 Hispanic community. Being able to make your own decisions and 0:18:55.920 --> 0:18:58.480 freedom is one of the most important values that you 0:18:58.480 --> 0:19:02.000 can have as an American. Teresa Kumar, co founder and 0:19:02.080 --> 0:19:05.960 president of Voto Latino, says the swift reopening appealed to 0:19:06.000 --> 0:19:09.679 many Latino business owners. That was for many Latino business 0:19:09.680 --> 0:19:13.680 owners a lifeline because they don't have any plan B 0:19:13.840 --> 0:19:16.160 to fall upon. She adds that the age of Hispanic 0:19:16.240 --> 0:19:19.120 voters in the Sunshine State also played a part. Lord 0:19:19.240 --> 0:19:22.000 is the only state where young Latino voters will never 0:19:22.080 --> 0:19:26.000 eclips older Latino voters and they have a tendency of 0:19:26.080 --> 0:19:33.320 being far more progressive policies. In California, Governor Gavin Newsom 0:19:33.400 --> 0:19:36.199 was reelected with the support of sixty two percent of 0:19:36.280 --> 0:19:39.720 Latino voters, but still two points lower than his first 0:19:39.720 --> 0:19:43.159 election in twenty eighteen, according to the Los Angeles Times. 0:19:43.640 --> 0:19:47.520 In Pennsylvania, Kumar says Latino support was strong for Democrat 0:19:47.640 --> 0:19:50.919 John Fetterman in Fetterman's race, and this is according to 0:19:50.960 --> 0:19:53.040 exip points that came out of March for Our Lives. 0:19:53.359 --> 0:19:56.280 Seventy nine percent of Latino youth voted for a Democrat 0:19:56.359 --> 0:19:59.640 in this past election and findings from research firm Equis 0:19:59.640 --> 0:20:03.520 shows solid support for Democrats from Latino voters in places 0:20:03.520 --> 0:20:07.480 like Nevada and Arizona in twenty twenty two. Yet still 0:20:07.560 --> 0:20:11.080 representative Quaar feels the party needs to step up their game. 0:20:12.840 --> 0:20:16.400 Some of us, for many years have said to the 0:20:16.520 --> 0:20:20.959 nationals ADCROPO C you know, DNC, and the state parties. 0:20:21.040 --> 0:20:25.680 We've said, hey, guys, we cannot take Hispanics for granted. 0:20:25.960 --> 0:20:29.920 You know, Usually the effort was, let's start after Labor Day, 0:20:30.119 --> 0:20:33.359 you know, sixty days or so before the election, and 0:20:33.359 --> 0:20:37.520 then let's start pushing that Latino victories. Gautierrez says, politicians 0:20:37.560 --> 0:20:40.800 need to remember that Latinos are not a monolist. Latinos 0:20:40.840 --> 0:20:44.240 in Texas and California and Florida are all very different 0:20:44.280 --> 0:20:47.879 and have very different lived experiences in background, and therefore 0:20:47.920 --> 0:20:50.520 their votes are going to be different at times. Lucetto 0:20:50.600 --> 0:20:53.120 points to the topic of abortion and how the support 0:20:53.160 --> 0:20:56.639 for pro life policies can vary culturally from state to state. 0:20:56.800 --> 0:21:00.159 You have a large Mexican population in Texas and a 0:21:00.240 --> 0:21:04.400 illegal voting population of Mexicans in Texas and in Mexico, 0:21:04.720 --> 0:21:07.600