WEBVTT - Hayfin Expects Private-Debt M&A; BI on Ozempic Risks 0:00:18.280 --> 0:00:21.040 Hello, and welcome to the Credit Edge, a weekly markets podcast. 0:00:21.360 --> 0:00:23.840 My name is James Crumbie. I'm a senior editor at Bloomberg. 0:00:24.400 --> 0:00:27.320 This week, we're very pleased to welcome Mark Cherimutu from 0:00:27.320 --> 0:00:30.960 Hafen Capital Management, a private credit company mostly focused on Europe. 0:00:31.120 --> 0:00:32.440 How are you, Mark good? 0:00:32.479 --> 0:00:34.720 How are you doing very well? Thank you? Thanks for 0:00:34.760 --> 0:00:36.360 joining us today and I'm very keen to get your 0:00:36.400 --> 0:00:40.000 thoughts on the private debt market and from Bloomberg Intelligence. 0:00:40.040 --> 0:00:42.960 It's great to see Julie Hung, who covers consumer credit. 0:00:43.240 --> 0:00:46.240 Welcome back, Julie, thank you for having me back. Also 0:00:46.320 --> 0:00:48.880 delighted to see Lisa Lee, who covers credit markets from London. 0:00:48.880 --> 0:00:51.239 Brilliant to see you again, Lisa, thanks for having me on. 0:00:51.720 --> 0:00:54.000 So let's start with you Mark. Great to have you 0:00:54.040 --> 0:00:57.640 on the Credit Edge. The big question, and everyone keeps 0:00:57.640 --> 0:01:02.160 telling me, it's the fact olden age for private credit. 0:01:02.800 --> 0:01:04.760 Is that still the case twenty twenty four? Is it 0:01:04.760 --> 0:01:06.479 a golden age? Does it continue? 0:01:07.000 --> 0:01:10.240 It's it's hard to look past it. I mean, if 0:01:10.280 --> 0:01:16.400 you think about the fundamentals, double digit yield, first lean security, 0:01:17.080 --> 0:01:21.240 stable companies, larger companies than ever being financed by private credit. 0:01:21.280 --> 0:01:25.320 It's hard to look past that the fundamentals are stronger 0:01:25.360 --> 0:01:28.120 now than they've ever been and the technicals which are 0:01:28.160 --> 0:01:30.959 driving the growth of private credit that we see extending 0:01:31.000 --> 0:01:33.200 beyond twenty four and further. 0:01:33.319 --> 0:01:36.240 So we actually think we're very bullish on the market. 0:01:36.600 --> 0:01:38.280 So what does that actually mean for twenty twenty four? 0:01:38.319 --> 0:01:40.959 Is that bigger and bigger deals. Is it record levels 0:01:40.959 --> 0:01:45.280 of fundraising? Is it more disintermediation of Wall Street? Better returns? 0:01:45.280 --> 0:01:47.600 I mean what specifically we're talking about when we're talking about, 0:01:47.680 --> 0:01:50.120 you know, fantastic times in private debt. 0:01:51.000 --> 0:01:54.520 I think there's two two elements to the growth which 0:01:54.680 --> 0:01:57.560 sometimes get mixed. There's there's there's the white space growth 0:01:57.640 --> 0:02:01.960 for private credit in Europe, which is just larger companies, 0:02:02.000 --> 0:02:05.040 more diversified companies, and more sponsors using US as an 0:02:05.080 --> 0:02:08.080 asset class. So that's one area of growth and there's 0:02:08.160 --> 0:02:11.080 lots of reasons why that's continued to grow. You know, 0:02:11.120 --> 0:02:14.760 there's more banking assets in Europe and there's in the US, 0:02:15.280 --> 0:02:17.560 and we've got further to go in terms of that 0:02:19.960 --> 0:02:24.000 de leveraging of the European banking balance sheet. So there's 0:02:24.480 --> 0:02:27.000 and the replacement being private credit. So that's one element 0:02:27.320 --> 0:02:30.400 and then there's also the overlap but with the public markets. 0:02:30.600 --> 0:02:32.440 I mean, one of the drivers over the last two 0:02:32.520 --> 0:02:36.120 years of activity within in Europe in private credit has 0:02:36.120 --> 0:02:39.280 been that battleground over what used to be serviced by 0:02:39.720 --> 0:02:43.880 the broadly public broadly syndicated markets and what's gone what's 0:02:43.919 --> 0:02:47.240 gone to private and so and we foresee that continuing 0:02:47.280 --> 0:02:49.880 and there being a coexistence between the two asset classes, 0:02:49.960 --> 0:02:52.520 so we see growth in both directions. 0:02:53.680 --> 0:02:56.880 Talking about these big private credit funds, we're now seeing 0:02:57.000 --> 0:03:00.720 possibly a record twenty billion dollar fund. What is the 0:03:00.720 --> 0:03:02.840 fundraising environment right like right now? 0:03:03.320 --> 0:03:08.160 It's look, it's it's fundraising is tough for everyone. It's 0:03:08.200 --> 0:03:11.800 taking longer than ever before. So fundraisers which use cycles 0:03:11.800 --> 0:03:14.520 which used to be twelve months are now now eighteen months. 0:03:14.919 --> 0:03:17.520 But I think what we're seeing is there's a there's 0:03:17.560 --> 0:03:21.120 a concentration going on. So the bigger managers are the 0:03:21.520 --> 0:03:24.079 ones with a better track records, the ones with more 0:03:24.160 --> 0:03:28.480 established origination networks, They're the ones that are really succeeding, 0:03:28.520 --> 0:03:30.840 those which have the better relationships with the sponsors and 0:03:30.880 --> 0:03:33.320 so source the better deals and get the better terms. 0:03:33.760 --> 0:03:37.440 And that you're seeing that consolidation happening. From a more 0:03:37.480 --> 0:03:40.560 macro perspective, Europe is just really interesting, right because if 0:03:40.800 --> 0:03:43.800 a lot of the asset allocators are over indexed private 0:03:43.840 --> 0:03:47.600 equity relative to credit, and they're over indexed US to Europe. 0:03:47.880 --> 0:03:51.640 So from a diversification perspective, European private credit is a 0:03:51.640 --> 0:03:54.920 great place to be allocating in twenty four And so 0:03:55.400 --> 0:03:58.800 whilst there's a lot of people raising and it is 0:03:58.840 --> 0:04:01.760 taking longer, the most successful managers are the ones which 0:04:01.760 --> 0:04:02.640 are really gaining traction. 0:04:03.400 --> 0:04:06.880 And do you find some of the interested LPs from 0:04:06.880 --> 0:04:09.080 the Middle East, from the US, from Asia? I know 0:04:09.120 --> 0:04:11.040 there's broad array of interest, but if you had to 0:04:11.080 --> 0:04:14.560 pick a certain region which is most particularly interesting in 0:04:14.600 --> 0:04:18.719 European private credit, what would that be? Where you guys focused. 0:04:20.040 --> 0:04:22.560 I don't think there's any one particular region, but we've 0:04:22.600 --> 0:04:26.280 really noticed an uptick in interest in the Middle East, 0:04:27.080 --> 0:04:31.400 in Asia and even in the US looking to diversify 0:04:31.440 --> 0:04:35.440 their portfolios and really attracted by the opportunity in Europe. 0:04:35.440 --> 0:04:38.960 And so you know, there's there's there's multiple touchpoints and 0:04:39.040 --> 0:04:40.760 multiple areas of interest in Europe. 0:04:40.880 --> 0:04:45.080 Now, what's your first destination there on the on an airplane? 0:04:45.120 --> 0:04:45.360 Is it? 0:04:45.480 --> 0:04:46.080 Is it Toronto. 0:04:46.240 --> 0:04:46.719 Is it Dubai? 0:04:46.760 --> 0:04:48.520 I mean, what's where do you Where do you like 0:04:48.560 --> 0:04:50.000 to go? Mostly for your fundraising. 0:04:51.880 --> 0:04:53.880 I spend a lot of time in the US and 0:04:53.920 --> 0:04:57.520 a lot of time in the Middle East, But it's 0:04:58.040 --> 0:04:59.719 I don't think I'm unique in that way. 0:05:00.120 --> 0:05:02.920 Respect Just back to the sort of golden age idea 0:05:02.920 --> 0:05:05.240 that we're talking about. We've had some guests on here 0:05:05.240 --> 0:05:07.840 recently raising a lot of red flags about private debt. 0:05:08.160 --> 0:05:10.600 They're maybe not as close to you, as close to 0:05:10.600 --> 0:05:12.920 the market as you are, but you know, they talk 0:05:12.960 --> 0:05:15.279 about the speed of the market's growth. It's already bigger 0:05:15.279 --> 0:05:17.160 than the US highe bond market and it didn't take 0:05:17.240 --> 0:05:20.080 very long to get there. There's you know, seem to 0:05:20.120 --> 0:05:24.120 be no transparency, not much liquidity, all the risks again 0:05:24.160 --> 0:05:27.679 of companies falling behind on debt payments. As the rates, 0:05:27.760 --> 0:05:29.560 you know, they may be coming down, but they are 0:05:29.680 --> 0:05:31.919 very high in relative terms. There's going to be a 0:05:31.920 --> 0:05:36.800 refinancing wall. And at the same time, there are a 0:05:36.800 --> 0:05:40.480 lot of you know, relatively liquid and high yielding opportunities 0:05:40.480 --> 0:05:43.719 out there, you know, including government bonds, so you don't 0:05:43.760 --> 0:05:47.880 really need to stretch for the return anymore. Some you know, 0:05:48.040 --> 0:05:51.120 maybe maybe they are conflicted because they're trying to compete 0:05:51.160 --> 0:05:53.120 against you. But and it seems to come from the 0:05:53.120 --> 0:05:55.599 cell side, but they are calling it a bubble. Do 0:05:55.640 --> 0:05:56.600 you think that's justified? 0:05:57.160 --> 0:06:00.400 It's it's ironic that the banks are calling above all, 0:06:00.480 --> 0:06:03.599 given that they're the ones trying to get into private credits. 0:06:03.600 --> 0:06:08.080 So I find that quite a musing. Look, it's there, 0:06:09.200 --> 0:06:12.479 it's incontestable. There has been rapid growth in in the 0:06:12.480 --> 0:06:15.520 asset class in Europe in particular. We've got we're still 0:06:15.520 --> 0:06:17.640 a long way behind the US, and so there's there's 0:06:17.640 --> 0:06:21.360 more runway. I think you'll find the sophistication of the 0:06:21.440 --> 0:06:25.120 larger managers in thinking about risk, in thinking about their 0:06:25.120 --> 0:06:29.000 regulary framework, in thinking about the lines of defense, are 0:06:29.040 --> 0:06:32.200 actually much more advanced and much more sophisticated than the 0:06:32.240 --> 0:06:35.919 outside world gives us credit for. I think credits selection, 0:06:36.640 --> 0:06:39.600 I think is much better than people give us credit for. 0:06:40.000 --> 0:06:42.080 I think we are also going into a period where 0:06:42.600 --> 0:06:47.040 that there's going to be a bifurcation between those managers 0:06:47.040 --> 0:06:51.240 who have you picked well, they've got really good performing 0:06:51.320 --> 0:06:55.200 portfolios and more assets going in and more concentration on 0:06:55.279 --> 0:06:58.360 moost of those that smaller group, who are who the 0:06:58.400 --> 0:07:01.680 better pickers right and the better stewards of capital? I 0:07:01.680 --> 0:07:03.760 think that you know, we've been through a ten year 0:07:03.760 --> 0:07:09.120 period of low interest rates, low defaults, relatively attractive growth, 0:07:09.840 --> 0:07:11.960 and now to the time where you're going to actually 0:07:12.200 --> 0:07:14.760 find out who's who's really good at this right, who's 0:07:14.840 --> 0:07:17.960 really a good steward of capital, because we're, as you say, 0:07:17.960 --> 0:07:21.040 we're in an environment where rates are still elevated, growth 0:07:21.160 --> 0:07:25.640 is still anemic, there's still some systemic risks to the economy. 0:07:25.720 --> 0:07:30.760 So I think it's I understand people's concern, but as 0:07:30.760 --> 0:07:34.640 a persispent on the inside, you know, looking out, things 0:07:34.640 --> 0:07:37.240 are actually less beleep than you'd imagine. 0:07:37.560 --> 0:07:40.000 Mark, are there specific sectors. 0:07:39.520 --> 0:07:40.160 That you like? 0:07:41.520 --> 0:07:44.360 Yeah, I think, I mean it's it's no it's no 0:07:44.440 --> 0:07:48.320 secret that we have we like healthcare. We have a 0:07:48.360 --> 0:07:52.400 dedicated healthcare team, both in the US and Europe. It's 0:07:52.440 --> 0:07:55.120 been a great source of deployment for us, the more 0:07:55.200 --> 0:07:58.000 stable and resilient parts of healthcare in particular. 0:07:59.200 --> 0:08:01.400 You know, we're not you. We like software. Like a 0:08:01.400 --> 0:08:02.080 lot of other. 0:08:02.120 --> 0:08:06.480 Private credit guys. We like picking the better businesses within 0:08:06.520 --> 0:08:09.240 the software world. We know that not all software businesses 0:08:09.280 --> 0:08:12.560 are created equally and we like sort of you know, 0:08:12.680 --> 0:08:16.720 the very market leading professional services sector where you've got 0:08:16.720 --> 0:08:21.920 a real reasons to exist consuming nony discretionary, you know, 0:08:21.960 --> 0:08:24.280 real downside protection. Those are the things. Those are the 0:08:24.280 --> 0:08:25.480 areas that we spend a lot. 0:08:25.360 --> 0:08:28.000 Of our time on the software mark. How are these 0:08:28.080 --> 0:08:30.840 earnings holding up given those types of deals, you know, 0:08:30.840 --> 0:08:34.240 they're generally known for heavy add backs and synergy expectations. 0:08:35.679 --> 0:08:39.800 We've just gone through our portfolio review and they're actually 0:08:39.800 --> 0:08:44.080 holding up really well. We've for exactly those reasons that 0:08:44.120 --> 0:08:47.200 you mentioned, We've been paying a lot of attention to 0:08:47.240 --> 0:08:52.600 the performance and the monthly incordantly numbers and actually top 0:08:52.600 --> 0:08:55.200 line is holding up in the names that we have 0:08:55.440 --> 0:08:59.480 really really well. So we've been pleased with performance in there. 0:09:00.200 --> 0:09:03.880 Are there any centers that you avoid mark you just 0:09:03.960 --> 0:09:07.080 think are like kryptonite for private credit and for Haven. 0:09:07.640 --> 0:09:10.120 I think it's I can't speak for the market as 0:09:10.160 --> 0:09:15.640 a whole, but but we we find consumer exposed businesses 0:09:15.679 --> 0:09:19.520 with no downside protection really difficult, right and and particularly 0:09:19.520 --> 0:09:22.560 in this sort of environment where you know, the rate 0:09:22.880 --> 0:09:25.520 rate rises are affecting Joe consumer that's going to flow 0:09:25.559 --> 0:09:28.480 through to mortgages, and and effect disposable income. So so 0:09:28.600 --> 0:09:31.520 that's those are parts of the market that we struggle with. 0:09:32.400 --> 0:09:36.560 Pure retail, for instance, work with no no asset backing 0:09:36.920 --> 0:09:37.440 really hard. 0:09:38.280 --> 0:09:41.280 You know, do you have a rating standard for when 0:09:41.440 --> 0:09:44.880 when you're looking at what investments to make you want 0:09:44.920 --> 0:09:50.160 to avoid very high yield or you know, you're you're 0:09:50.200 --> 0:09:54.720 looking more at the business more than just the credit ratings. 0:09:55.040 --> 0:09:59.040 I mean, we don't take a credit rating approach to 0:09:59.160 --> 0:10:02.280 take to the investments we look at. We are very 0:10:02.320 --> 0:10:04.920 focused on credit. You know, Credit selection for us is 0:10:05.240 --> 0:10:11.560 the most important thing that we do, and so diligence, understanding, sustainability, learnings, 0:10:12.080 --> 0:10:15.800 you know, free cash flow, real threats of the business, 0:10:16.800 --> 0:10:19.560 both competitive as well as systemic, you know, those are 0:10:19.559 --> 0:10:21.760 the those are the real core things that we focus on. 0:10:22.520 --> 0:10:24.720 We're we sort of look at the look at credit 0:10:24.760 --> 0:10:26.520 from a from a fundamentalist perspective. 0:10:27.040 --> 0:10:29.319 On the returns mark, I mean they are very high 0:10:29.400 --> 0:10:32.200 in relative terms, I mean high teens yields on some 0:10:32.240 --> 0:10:35.480 of these deals. That sounds great from the investors standpoint, 0:10:35.480 --> 0:10:38.200 but for an issuer, how sustainable is it to them, 0:10:38.360 --> 0:10:42.280 you know to pay that level of interest for the 0:10:42.280 --> 0:10:44.640 long run. I mean are you not putting putting all 0:10:44.640 --> 0:10:46.360 of these companies under a huge amount of pressure. 0:10:47.960 --> 0:10:50.640 Yeah, it's look, we're we're a floating rate product, right, 0:10:50.760 --> 0:10:53.960 so that's a benefit to our investors, But obviously, as 0:10:54.160 --> 0:10:56.240 as you know, as you pointed out, it's that's the 0:10:56.240 --> 0:11:00.559 burden of our portfolio companies. We focus very much on 0:11:00.640 --> 0:11:03.840 free casually and so we focus on even with the 0:11:03.920 --> 0:11:06.880 rates where they are and the margins where they are 0:11:06.920 --> 0:11:09.320 from a market perspective, we focus on the businesses that 0:11:09.679 --> 0:11:13.360 can can support those and actually we've seen leverage come 0:11:13.440 --> 0:11:16.480 down in the last twelve months in a direct as 0:11:16.520 --> 0:11:19.760 a direct result of where rates are, and so there's 0:11:19.800 --> 0:11:22.160 a right sizing of the balance sheet to try and 0:11:22.200 --> 0:11:26.080 address that elevated interest rate. 0:11:26.000 --> 0:11:29.080 Gun Do you think there's come a time when there's 0:11:29.080 --> 0:11:32.040 gonna be a lag effect of other rate rises and 0:11:32.080 --> 0:11:35.160 the interest rate payments, Because you're right, corporates have held 0:11:35.240 --> 0:11:38.439 up very well for many many people. Many portfolios are 0:11:38.440 --> 0:11:42.000 doing okay. But as we get into almost a thirty 0:11:42.080 --> 0:11:46.120 year of rate high rights hikes and perhaps a recessionary environment, 0:11:46.520 --> 0:11:50.760 what do you think about the future. 0:11:48.679 --> 0:11:55.679 We're cautious on the outlook. Credit investors by nature are 0:11:55.720 --> 0:11:59.440 more downside perspective than outside. 0:11:59.840 --> 0:12:00.719 We are. 0:12:02.120 --> 0:12:05.800 Cautious around how that lag effect and fully seeing the 0:12:05.840 --> 0:12:08.880 effect of having these elevated rates. We're going to have 0:12:08.920 --> 0:12:11.440 elevated rates in Europe for much longer than the US, 0:12:11.600 --> 0:12:13.880 like if you just look at where where the curves are. 0:12:14.760 --> 0:12:18.199 And so it's really about sustainability of business models. It's 0:12:18.240 --> 0:12:20.760 really about, you know, picking the ones which we have 0:12:20.800 --> 0:12:24.480 a reason to exist and have an ability and scale 0:12:24.559 --> 0:12:28.040 to cope with the pressures and still manage that. But 0:12:28.760 --> 0:12:30.720 you're right, they're going to be some companies that just can't. 0:12:31.320 --> 0:12:34.280 And one of the things we've done in the last 0:12:34.320 --> 0:12:36.480 twelve months is trying to avoid some of the smaller 0:12:36.480 --> 0:12:39.800 companies which rich are the ones which are generally struggle 0:12:40.440 --> 0:12:45.240 in the face of macroeconomic pressure. So we've very much 0:12:45.280 --> 0:12:49.079 focused our attention on moving the medium size of companies 0:12:49.160 --> 0:12:50.000 up in Apple project. 0:12:50.880 --> 0:12:53.560 In terms of the competitive landscape, mark, you've seen a 0:12:53.600 --> 0:12:56.200 ton of new entrants come into private credit. Everyone wants 0:12:56.200 --> 0:12:59.480 to be involved. It's a big new thing. But I mean, 0:12:59.520 --> 0:13:02.320 we've taught on the shows about the risks that that 0:13:02.360 --> 0:13:05.680 brings perhaps less sophisticated participants coming in doing deals that 0:13:05.679 --> 0:13:09.160 maybe shouldn't be done, and those those causing problems down 0:13:09.200 --> 0:13:11.280 the line. But in terms of you know your business, 0:13:11.280 --> 0:13:13.679 are you seeing fee pressure from this? Are you seeing 0:13:13.720 --> 0:13:17.160 investors asked for lower management fees or greater oversight or 0:13:17.160 --> 0:13:19.640 anything else to try? And you know, because because they can, 0:13:19.679 --> 0:13:21.400 I mean, you know, they can pick and choose. 0:13:22.200 --> 0:13:27.120 I think as a general comment that investors are very savvy. 0:13:27.400 --> 0:13:30.199 They they realize that there's a lot of people coming 0:13:30.240 --> 0:13:34.520 to raise funds and so focused on the economics around 0:13:35.160 --> 0:13:36.520 around the managers they. 0:13:36.400 --> 0:13:37.280 Do want to allocate to. 0:13:38.160 --> 0:13:40.240 I think there is still a premium for those that 0:13:40.320 --> 0:13:46.640 have long established track records, have real presence and subsistence 0:13:46.640 --> 0:13:50.720 in the markets, and and and have real originating networks 0:13:50.720 --> 0:13:54.000 which which can help in in low eminem environments as 0:13:54.000 --> 0:13:56.679 we've seen. So I think they're you're right, there are 0:13:56.760 --> 0:14:00.120 new entrants. You're right, that creates a dynamic that a 0:14:00.559 --> 0:14:06.120 influence the terms on raising. But I think our experience, 0:14:06.160 --> 0:14:09.120 and I think the experience about peers has been people flighting, 0:14:09.400 --> 0:14:13.080 people flock to quality, and there's a price to pay 0:14:13.120 --> 0:14:15.920 for that. So I think it's still an attractive environment 0:14:16.000 --> 0:14:18.400 for us, for us and our peers to raise. 0:14:19.640 --> 0:14:23.120 You say, you've gone towards more bigger companies. And last 0:14:23.160 --> 0:14:26.920 year we saw the biggest private credit loan in Europe 0:14:27.720 --> 0:14:32.360 and that entailed a syndication of a number of lenders. 0:14:32.360 --> 0:14:34.800 What do you think about private credit and these sort 0:14:34.840 --> 0:14:38.240 of almost lightly syndicated deals where you see twenty somewhat 0:14:38.280 --> 0:14:40.400 lenders in a private credit deal. It's sort of a 0:14:40.480 --> 0:14:43.920 little bit different from what has traditionally been what private 0:14:43.920 --> 0:14:46.960 credit is supposed to be one lender, maybe two lenders 0:14:46.960 --> 0:14:49.120 at most, but almost back to the way the leverage 0:14:49.160 --> 0:14:51.200 loan market used to be saved fifteen years ago. 0:14:51.600 --> 0:14:55.840 Yeah, look at this. Clearly there's been a shift in 0:14:55.880 --> 0:14:59.720 the last twelve months. The prevalence of clubs in Europe 0:14:59.720 --> 0:15:02.080 business is on the rise, and I think that's a 0:15:02.800 --> 0:15:05.080 trend and theme that we're going to see throughout this 0:15:05.240 --> 0:15:09.800 here and beyond. I would say that the twenty plus 0:15:09.880 --> 0:15:14.600 lender syndicates is the outlier. I mean, we've only had 0:15:14.680 --> 0:15:18.880 six deals in Europe above a billion. I think the 0:15:18.960 --> 0:15:22.400 sweet spot in terms of syndic conversation that we're seeing 0:15:22.440 --> 0:15:23.160 is more in the two. 0:15:23.080 --> 0:15:23.760 To five range. 0:15:24.320 --> 0:15:27.680 And there, I think you've got and that comes back 0:15:27.680 --> 0:15:31.320 to the theme of concentration, you've got the same group 0:15:31.360 --> 0:15:34.280 of people looking at the same assets and being clubbed together. 0:15:34.640 --> 0:15:37.280 They're generally ones which think about credit and risk in 0:15:37.320 --> 0:15:40.360 the same way. They generally think about documentation in the 0:15:40.400 --> 0:15:40.880 same way. 0:15:41.320 --> 0:15:45.160 So I think you're right there are these outliers, but. 0:15:45.160 --> 0:15:47.360 Actually the market is from all centering on a much 0:15:47.440 --> 0:15:50.360 lower number of participants, and that I think is going 0:15:50.400 --> 0:15:50.920 to continue. 0:15:51.040 --> 0:15:53.800 Okay, And do you worry about any of these syndications 0:15:53.840 --> 0:15:59.800 about liquidity, about having almost like going after there's probably 0:16:00.000 --> 0:16:02.560 indicator market. And now with the banks feeling a little 0:16:02.560 --> 0:16:04.720 bit more assured, do you think they'll come back for 0:16:04.800 --> 0:16:05.840 some of the deals that they've. 0:16:05.720 --> 0:16:10.040 Last I think we're not naive right there. 0:16:10.040 --> 0:16:12.720 We know that the banks are actively pitching to cut 0:16:12.760 --> 0:16:15.680 and refinance some of the private credit deals that were 0:16:15.680 --> 0:16:19.000 done away from them in the last two years. I 0:16:19.080 --> 0:16:22.080 happen to think that there's a there's a natural medium 0:16:22.200 --> 0:16:25.040 where we can where the two assets co exist, right, 0:16:25.120 --> 0:16:27.960 And but it goes back to the point I mean 0:16:28.320 --> 0:16:32.200 at the beginning, that's not our sole source of growth. Actually, 0:16:32.200 --> 0:16:34.800 the more attractive source of growth is the systemic leakage 0:16:34.840 --> 0:16:37.560 of capital out of the system and into private credit, 0:16:37.600 --> 0:16:41.800 and so I actually think that you know, yes, we'll 0:16:41.800 --> 0:16:44.320 see more activity than the banks. Yes there'll be a 0:16:44.320 --> 0:16:47.720 bit more competition around those type of assets, but actually 0:16:47.720 --> 0:16:50.120 not that's that's good for us, right, because we've got 0:16:50.320 --> 0:16:51.360 plenty of other things to do. 0:16:51.960 --> 0:16:55.680 When you look around at everything, you cover the big universe, 0:16:55.800 --> 0:16:58.400 what are you most excited about for twenty twenty four? 0:16:58.400 --> 0:16:59.720 Where's the big opportunity? 0:17:00.800 --> 0:17:03.800 I think for Europe in private credit, the big opportunity 0:17:03.880 --> 0:17:08.080 is going to come in refinancings, right, because there's never 0:17:08.160 --> 0:17:10.760 to be going to be an uptick in LBO activity. 0:17:11.400 --> 0:17:15.240 Twenty three was pretty muted from an M and A perspective. 0:17:15.920 --> 0:17:18.600 I think if you talk to market participants, you know 0:17:18.640 --> 0:17:20.840 we're not going to see an immediate snap back. It's 0:17:20.880 --> 0:17:24.919 probably back ended. But I think what we what is 0:17:24.960 --> 0:17:27.960 going to be interesting is we've seen almost no refinancing 0:17:28.400 --> 0:17:32.240 in the last twenty four months, and there's there are 0:17:32.320 --> 0:17:35.360 large maturity walls in twenty six and twenty seven, you've 0:17:35.359 --> 0:17:37.760 got some in twenty five as well, and so I 0:17:37.800 --> 0:17:39.760 think twenty four is going to be the year. 0:17:39.600 --> 0:17:41.760 Of of of of. 0:17:43.119 --> 0:17:48.920 The rebooting of that refinancing opportunity, and a particular interest 0:17:48.960 --> 0:17:51.280 for us is a lot of these companies are not 0:17:53.080 --> 0:17:55.320 They haven't de leaveed enough to be able to be 0:17:55.400 --> 0:17:58.520 refinanunced dollar for dollar in cash pay terms. So I 0:17:58.560 --> 0:18:00.560 think you're going to have to You're gonna have to 0:18:00.560 --> 0:18:03.040 recut some of these balance sheets, which is going to 0:18:03.040 --> 0:18:06.359 be provide a really interesting direct lending product at a. 0:18:06.960 --> 0:18:08.080 Lower attachment point. 0:18:08.440 --> 0:18:12.120 But also for for for firms like ourselves who can 0:18:12.119 --> 0:18:14.920 be have more flexible capital to look at junior debt 0:18:15.160 --> 0:18:19.720 in different strategies to plug that gap, because we whilst 0:18:19.840 --> 0:18:23.679 the private actor community will probably help grease the wheels 0:18:23.680 --> 0:18:25.399 by putting a bit of equity, we don't think that 0:18:25.400 --> 0:18:25.840 they're going. 0:18:25.760 --> 0:18:26.679 To solve the whole problem. 0:18:27.240 --> 0:18:30.240 So firms that have that in their locker can and 0:18:30.320 --> 0:18:34.120 be able to look at subordinated debt in refinancings through 0:18:34.160 --> 0:18:35.080 different strategies. 0:18:35.119 --> 0:18:36.440 I think it's going to that's gonna be a really 0:18:36.480 --> 0:18:37.320 interesting opportunity. 0:18:38.280 --> 0:18:40.720 So before we dig in on the consumer set with Julie, 0:18:40.760 --> 0:18:43.400 I'm going to keep you here, Julie mark I did 0:18:43.400 --> 0:18:47.359 want to ask you about consolidation in this industry. That 0:18:47.440 --> 0:18:49.800 seems to be something that people are talking about. In 0:18:49.840 --> 0:18:52.480 addition is hay Finn for sale. 0:18:54.040 --> 0:18:56.720 I think, you know, it's it's well, we're flattered that 0:18:56.720 --> 0:18:58.560 we're getting so much interest, but I think, you know, 0:18:58.640 --> 0:19:03.399 it's hard to comment on on market speculation. What what 0:19:03.560 --> 0:19:08.080 I think is interesting around the interest that you mentioned 0:19:08.119 --> 0:19:11.760 is just the focus on European private credit and how 0:19:11.800 --> 0:19:14.880 that's how people are looking at that as the next 0:19:14.920 --> 0:19:18.760 real big growth driver and that sort of over indexation 0:19:18.920 --> 0:19:21.159 point that I mentioned earlier around private equity and the 0:19:21.280 --> 0:19:25.240 US really focusing on private credit. I think that's that's 0:19:25.240 --> 0:19:29.680 super exciting. I think the consolidation point, it's we're seeing 0:19:29.920 --> 0:19:34.000 concentration within fewer, fewer hands, right, It's the bigger managers 0:19:34.000 --> 0:19:34.800 that are getting bigger. 0:19:34.800 --> 0:19:35.600 It's the bigger. 0:19:35.359 --> 0:19:39.760 Managers that are having more traction in fundraising, and it's 0:19:39.800 --> 0:19:42.040 the bigger managers that are sourcing the better deals, and 0:19:42.080 --> 0:19:44.520 so that I think that that trend is going to continue. 0:19:44.840 --> 0:19:46.400 We see ourselves as part of that. 0:19:46.800 --> 0:19:48.959 And just be clear on the europe point. I mean, 0:19:49.080 --> 0:19:50.760 is it because it's cheap versus the US? 0:19:50.880 --> 0:19:54.440 Is that the opportunity I think it's it's it's there's 0:19:54.440 --> 0:19:59.520 a diversification point from where allocators have allocated in the past. 0:19:59.520 --> 0:20:01.840 Of what they have in their portfolio. But there's also 0:20:01.880 --> 0:20:05.080 an inefficiency in Europe, in the European markets, which is 0:20:05.160 --> 0:20:10.560 which is attractor to to to to monetize right the 0:20:10.560 --> 0:20:14.760 the You've got a patchwork of insolvency regimes across Europe. 0:20:15.080 --> 0:20:20.520 You've got differences and structures between Italy and in the 0:20:20.600 --> 0:20:21.640 UK and France. 0:20:22.280 --> 0:20:26.800 You've got you've got difference is in terms of the 0:20:26.840 --> 0:20:31.240 banking land statement and what state of deleveraging their about 0:20:31.240 --> 0:20:34.080 their corporate balance sheets, all of which provides lots of 0:20:34.119 --> 0:20:37.359 different pockets of opportunities and lots of different inefficiencies that 0:20:37.440 --> 0:20:40.159 really play into the hands of private credit lenders. 0:20:40.240 --> 0:20:41.879 So that there's there's two. 0:20:41.800 --> 0:20:46.040 Elements to to to the to the interest in our market. 0:20:46.480 --> 0:20:49.720 Great stuff, but Cherimoto from Hafen Capital Management, thank you 0:20:49.800 --> 0:20:52.560 so much for joining us. Thanks a lot, do come 0:20:52.600 --> 0:20:55.160 back soon and does know how it's all going. And 0:20:55.320 --> 0:20:57.639 Lisa Lye with Bloomberg News in London, many thanks for joining, 0:20:57.960 --> 0:21:00.680 Thank you for having me read all of Lisa's great 0:21:00.680 --> 0:21:03.200 scoops on the Bloomberg terminal and of course at Bloomberg 0:21:03.240 --> 0:21:06.879 dot com. And so Julie Hung with Bloomberg Intelligence in 0:21:06.920 --> 0:21:09.120 New York. We're keeping you here. Thank you so much 0:21:09.200 --> 0:21:10.760 for joining us on the show. 0:21:11.359 --> 0:21:12.639 Thank you for having me again. 0:21:13.359 --> 0:21:16.960 You have a few theories about ozepic, the weight loss drug, 0:21:17.040 --> 0:21:20.000 and how it affects the companies you cover. I'm very 0:21:20.000 --> 0:21:22.359 interested in sort of digging deeper into that, but I 0:21:22.359 --> 0:21:23.960 wanted to kind of start by breaking it down in 0:21:24.000 --> 0:21:28.200 really really simple terms. How does a weight loss treatment 0:21:28.280 --> 0:21:30.120 that you know is really in the news now everyone's 0:21:30.160 --> 0:21:33.359 talking about it, How can that affect the credit of 0:21:33.600 --> 0:21:36.040 food and drinks companies that you cover? I mean, is 0:21:36.080 --> 0:21:37.720