1 00:00:18,000 --> 00:00:20,599 Speaker 1: Hello, and welcome to the Credit Edge, a weekly markets podcast. 2 00:00:20,720 --> 00:00:23,279 Speaker 1: My name is James Crombie. I'm a senior editor at Bloomberg. 3 00:00:23,640 --> 00:00:26,400 Speaker 1: This week, we're very pleased to welcome Aquila Graywall, global 4 00:00:26,400 --> 00:00:28,600 Speaker 1: head of credit product at Apollo. How are you, Aequila, 5 00:00:29,000 --> 00:00:29,440 Speaker 1: I'm great. 6 00:00:29,440 --> 00:00:31,000 Speaker 2: Thank you so much for having me, James. 7 00:00:30,840 --> 00:00:32,120 Speaker 1: Thank you so much for joining us. So we're very 8 00:00:32,120 --> 00:00:34,800 Speaker 1: excited to get your credit market views, and also delighted 9 00:00:34,840 --> 00:00:37,600 Speaker 1: to welcome back Matt Goitner with Bloomberg Intelligence. Hello Matt 10 00:00:37,800 --> 00:00:40,559 Speaker 1: Way everyone. So just to set the scene a bit 11 00:00:40,600 --> 00:00:43,040 Speaker 1: here at the top, US markets are rallying as rates 12 00:00:43,040 --> 00:00:45,519 Speaker 1: come down, the economy keeps chugging along, and investors look 13 00:00:45,560 --> 00:00:48,400 Speaker 1: forward to a new US administration, which the bulls think 14 00:00:48,440 --> 00:00:51,720 Speaker 1: will be very pro growth, pro markets. Credit markets are 15 00:00:51,760 --> 00:00:53,600 Speaker 1: on fire. There's a ton of demand for yield, and 16 00:00:53,640 --> 00:00:56,040 Speaker 1: we've seen a huge amount of borrowing by companies, with 17 00:00:56,120 --> 00:00:58,960 Speaker 1: a lot more to come in twenty twenty five. Private 18 00:00:59,000 --> 00:01:01,800 Speaker 1: debt in particular has experience of meteoric rise. It's now 19 00:01:01,840 --> 00:01:04,080 Speaker 1: a one point six trillion dollar market, but it could 20 00:01:04,120 --> 00:01:07,160 Speaker 1: well be worth tens of trillions of dollars more when 21 00:01:07,200 --> 00:01:10,360 Speaker 1: you wrap in all the potential asset based finance. Forty 22 00:01:10,400 --> 00:01:12,240 Speaker 1: trillion is the number we're going to talk about today, 23 00:01:12,240 --> 00:01:14,119 Speaker 1: almost as big as the S and P five hundred. 24 00:01:14,920 --> 00:01:19,920 Speaker 1: So we potentially have very rapid market expansion, tight bond spreads, 25 00:01:19,959 --> 00:01:23,679 Speaker 1: and ever increasing demand. But that doesn't all mean zero risk. 26 00:01:24,240 --> 00:01:26,520 Speaker 1: The Fed's cutting rates, but treasury yields are stuck above 27 00:01:26,560 --> 00:01:29,000 Speaker 1: four percent, and the stated aims of the next government 28 00:01:29,040 --> 00:01:33,000 Speaker 1: all sound very inflationary, signaling a period of higher for longer. 29 00:01:33,400 --> 00:01:36,720 Speaker 1: That means elevated debt costs, which will hurt borrowers across 30 00:01:36,720 --> 00:01:39,800 Speaker 1: the board, especially the weaker ones. We're already seeing more 31 00:01:39,840 --> 00:01:43,319 Speaker 1: defaults and bankruptcies in private markets. There's more amending and 32 00:01:43,400 --> 00:01:46,280 Speaker 1: extending of loans, while some lenders are having to get 33 00:01:46,280 --> 00:01:49,320 Speaker 1: repaid with more debt the so called payin kind deals, 34 00:01:49,320 --> 00:01:52,920 Speaker 1: which aren't always good good for the market. In the background, 35 00:01:52,960 --> 00:01:55,120 Speaker 1: we have a lot of geopolitical risk, which will only 36 00:01:55,160 --> 00:01:58,200 Speaker 1: be amplified by the Trump trade wars. Plus the threat 37 00:01:58,240 --> 00:02:01,400 Speaker 1: of US recession hasn't gone away. A downturn would cause 38 00:02:01,440 --> 00:02:05,360 Speaker 1: more distress in credit markets. So Akila, where do we 39 00:02:05,400 --> 00:02:07,800 Speaker 1: go from here? Is credit still a great place to 40 00:02:07,840 --> 00:02:08,799 Speaker 1: be in twenty twenty five? 41 00:02:09,880 --> 00:02:10,360 Speaker 2: Well, listen. 42 00:02:10,400 --> 00:02:13,079 Speaker 3: I think that those are really compelling and actually very 43 00:02:13,120 --> 00:02:15,520 Speaker 3: telling statistics that you that you work walk through. I 44 00:02:15,560 --> 00:02:19,080 Speaker 3: think for us, we absolutely believe that private credit and 45 00:02:19,120 --> 00:02:22,840 Speaker 3: credit is an enduring asset class for investors, and we 46 00:02:22,919 --> 00:02:25,360 Speaker 3: expect based on all the comments that you made, whether 47 00:02:25,440 --> 00:02:29,320 Speaker 3: it's higher for longer, a stronger economy, not without risks 48 00:02:29,320 --> 00:02:32,200 Speaker 3: that we can talk about, but having credit exposure in 49 00:02:32,240 --> 00:02:36,440 Speaker 3: your portfolio really will allow investors to capitalize on higher 50 00:02:36,520 --> 00:02:40,079 Speaker 3: yielding assets in a safe way for over the long term. 51 00:02:40,360 --> 00:02:43,079 Speaker 1: But why private markets, Why is that all the rage suddenly? 52 00:02:43,080 --> 00:02:44,400 Speaker 1: And how do you come up with that forty trillion 53 00:02:44,440 --> 00:02:47,240 Speaker 1: dollar number. It's it's obviously much more than our other 54 00:02:47,280 --> 00:02:50,200 Speaker 1: guests expect. Some say more like thirty trillion, others say 55 00:02:50,200 --> 00:02:52,080 Speaker 1: closed to five trillion. So why so big? 56 00:02:52,440 --> 00:02:54,760 Speaker 3: Yeah, so we've been saying forty trillion for a while, 57 00:02:55,320 --> 00:02:57,119 Speaker 3: and it's a good question. I think when you think 58 00:02:57,160 --> 00:03:01,120 Speaker 3: about the direct lending sub and grade, that one point 59 00:03:01,120 --> 00:03:04,400 Speaker 3: seven trillion dollar number is obviously very well quoted and 60 00:03:04,480 --> 00:03:08,079 Speaker 3: very well established. I think when we think about private markets, 61 00:03:08,120 --> 00:03:11,880 Speaker 3: we think it includes not just corporate credit below investment grade, 62 00:03:11,919 --> 00:03:14,639 Speaker 3: but also corporate credit that is investment grade. Which is 63 00:03:14,680 --> 00:03:18,200 Speaker 3: obviously a very sizable and large market in and of itself. 64 00:03:18,680 --> 00:03:20,840 Speaker 3: And then when you add in all the asset based 65 00:03:20,840 --> 00:03:24,480 Speaker 3: finance opportunities, including investment grade and non investment grade, that 66 00:03:24,600 --> 00:03:27,240 Speaker 3: is a very wide ecosystem. And we can talk about 67 00:03:27,240 --> 00:03:30,000 Speaker 3: asset base finances. As you well know, it touches every 68 00:03:30,000 --> 00:03:32,040 Speaker 3: single part of what we do as a consumer, as 69 00:03:32,040 --> 00:03:35,040 Speaker 3: a business, et cetera. And we think that that whole 70 00:03:35,080 --> 00:03:38,080 Speaker 3: market to collectively can get you to that forty trillion 71 00:03:38,120 --> 00:03:38,960 Speaker 3: dollar rough number. 72 00:03:39,240 --> 00:03:42,920 Speaker 4: Yeah, thank you. So I'm part of the corporate credit bucket, 73 00:03:42,960 --> 00:03:45,160 Speaker 4: so I call it covered the industrial sector. So this 74 00:03:45,240 --> 00:03:47,880 Speaker 4: year we've seen issuance up twenty percent from last year, 75 00:03:48,400 --> 00:03:51,320 Speaker 4: but that total is just one hundred billion dollars relative 76 00:03:51,360 --> 00:03:54,280 Speaker 4: to forty trillions. So we're talking about a splinter of 77 00:03:55,040 --> 00:03:58,320 Speaker 4: opportunity in terms of the total addressable markets. So can 78 00:03:58,360 --> 00:04:00,880 Speaker 4: you kind of take a step back and maybe breakdown 79 00:04:01,160 --> 00:04:03,760 Speaker 4: or bucket at that forty trillion? Where does where does 80 00:04:03,800 --> 00:04:08,080 Speaker 4: corporate credit sit within that hierarchy? Is it twenty five percent, 81 00:04:08,120 --> 00:04:10,400 Speaker 4: is it fifty percent, is it ten percent? How does 82 00:04:10,400 --> 00:04:11,600 Speaker 4: that sort of flow up? 83 00:04:12,280 --> 00:04:14,480 Speaker 3: Yeah, I think that we think of the asset base 84 00:04:14,520 --> 00:04:17,560 Speaker 3: finance world as roughly fifty to sixty percent let's just say, 85 00:04:17,680 --> 00:04:20,960 Speaker 3: of the of the forty trillion dollar number, and then 86 00:04:21,000 --> 00:04:24,000 Speaker 3: we have kind of the balance that will be across 87 00:04:24,040 --> 00:04:26,320 Speaker 3: corporate both in investment grade and not investment grade. And 88 00:04:26,320 --> 00:04:30,320 Speaker 3: obviously the sub ig corporate credit business and as a 89 00:04:30,400 --> 00:04:33,080 Speaker 3: category is probably in that kind of two trillion dollar number. 90 00:04:33,080 --> 00:04:35,240 Speaker 3: In the balance is private policements and other kind of 91 00:04:35,400 --> 00:04:37,039 Speaker 3: corporate investment grade type dead. 92 00:04:37,560 --> 00:04:39,440 Speaker 1: And when you break down the opportunity, I mean there 93 00:04:39,480 --> 00:04:42,360 Speaker 1: are different parts of the pie. What do you think 94 00:04:42,480 --> 00:04:45,080 Speaker 1: are the biggest let's say three areas to hit for 95 00:04:45,200 --> 00:04:45,680 Speaker 1: next year? 96 00:04:46,800 --> 00:04:48,839 Speaker 3: I think that for us, you know, we think that 97 00:04:48,880 --> 00:04:51,520 Speaker 3: there are a couple different things. I think we pardon 98 00:04:51,600 --> 00:04:53,960 Speaker 3: parcel of this entire discussion that you know, hopefully we'll 99 00:04:54,000 --> 00:04:57,120 Speaker 3: have today about private credit is the growth and expansion 100 00:04:57,160 --> 00:04:59,400 Speaker 3: of that market. And we, as you may have heard 101 00:04:59,480 --> 00:05:01,760 Speaker 3: or seen us, let's talk about we actually believe that 102 00:05:01,800 --> 00:05:05,000 Speaker 3: there's going to be continued convergence between what has historically 103 00:05:05,080 --> 00:05:08,200 Speaker 3: been public credit and private credit. And we expect that 104 00:05:08,200 --> 00:05:10,960 Speaker 3: convergence to continue. And so whether that gets anchored in 105 00:05:10,960 --> 00:05:13,760 Speaker 3: a forty trillion dollar number or a large one over time, 106 00:05:13,800 --> 00:05:16,360 Speaker 3: I think remains to be seen, but we think that, 107 00:05:16,520 --> 00:05:19,599 Speaker 3: you know, having a portfolio that both can invest in 108 00:05:19,640 --> 00:05:23,279 Speaker 3: public and private assets is really compelling. So, you know, 109 00:05:23,320 --> 00:05:25,840 Speaker 3: from our perspective, there's been a lot of kind of 110 00:05:26,120 --> 00:05:29,920 Speaker 3: discussion around public markets historically been really safe and private 111 00:05:29,920 --> 00:05:32,120 Speaker 3: markets deemed you know, quote unquote more risky, and that 112 00:05:32,160 --> 00:05:36,120 Speaker 3: could be because of illiquidity or perceived lack of transparency. 113 00:05:36,560 --> 00:05:39,279 Speaker 3: Our view is that, you know, everything is relative, but 114 00:05:39,320 --> 00:05:42,039 Speaker 3: private credit can actually be quite safe. And so in 115 00:05:42,120 --> 00:05:44,200 Speaker 3: terms of you know, three themes James to your point 116 00:05:44,200 --> 00:05:47,159 Speaker 3: that we think are going to continue to be pervasive 117 00:05:47,160 --> 00:05:50,159 Speaker 3: over the next year and beyond is kind of this 118 00:05:50,200 --> 00:05:55,000 Speaker 3: public and private market convergence. There is the accessing fixed 119 00:05:55,000 --> 00:05:57,719 Speaker 3: income replacement that's not just public credit but also in 120 00:05:57,800 --> 00:06:00,480 Speaker 3: private credit format. So when you think of about very 121 00:06:00,560 --> 00:06:04,280 Speaker 3: large institutions that have huge balance sheets that are really 122 00:06:04,320 --> 00:06:07,640 Speaker 3: looking at their fixing come portfolios as daily liquid product, 123 00:06:08,320 --> 00:06:11,080 Speaker 3: but they have twenty to thirty year you know, investment horizons, 124 00:06:11,480 --> 00:06:14,279 Speaker 3: pivoting a part of that portfolio to private assets actually 125 00:06:14,400 --> 00:06:17,200 Speaker 3: is very compelling but also prudent. And then the third 126 00:06:17,360 --> 00:06:19,360 Speaker 3: is you're seeing this now. I mean, we've been talking 127 00:06:19,400 --> 00:06:21,320 Speaker 3: about asset based it feels like a long time, but 128 00:06:21,360 --> 00:06:25,239 Speaker 3: equally not that long if you think about this year alone, 129 00:06:25,440 --> 00:06:27,960 Speaker 3: which we think that when you think about private credit 130 00:06:27,960 --> 00:06:30,599 Speaker 3: and direct lending, that has been the cornerstone of acid 131 00:06:30,640 --> 00:06:34,080 Speaker 3: allocations in private credit. But moving to asset based as 132 00:06:34,080 --> 00:06:36,080 Speaker 3: a diversifier in that portfolio is also a theme that 133 00:06:36,080 --> 00:06:37,040 Speaker 3: we think will continue. 134 00:06:37,480 --> 00:06:40,200 Speaker 4: But if you're doing that, are you going down the 135 00:06:40,240 --> 00:06:44,080 Speaker 4: credit quality spectrum? Like what it's all investment grade? Or 136 00:06:44,360 --> 00:06:46,440 Speaker 4: for you guys, are you guys looking at exposure below 137 00:06:46,560 --> 00:06:50,560 Speaker 4: investment grade? Is how do you guys judge or measure 138 00:06:51,560 --> 00:06:54,520 Speaker 4: I guess risk adjusted returns? Like your definition is typically 139 00:06:54,600 --> 00:06:57,880 Speaker 4: like the sharp ratio of return of the private credit 140 00:06:57,920 --> 00:07:01,200 Speaker 4: portfolio less risk free over sigma for the portfolio, or 141 00:07:01,440 --> 00:07:04,880 Speaker 4: how are you guys measuring those risk adjusted returns? 142 00:07:05,440 --> 00:07:06,599 Speaker 2: Yeah, I think it's a great question. 143 00:07:06,680 --> 00:07:09,520 Speaker 3: So I think that there's obviously kind of sharp ratio 144 00:07:09,520 --> 00:07:11,760 Speaker 3: which is, as you defined, kind of per unit of 145 00:07:11,840 --> 00:07:15,400 Speaker 3: excess risk over risk free and volatility constituents as well. 146 00:07:16,200 --> 00:07:17,920 Speaker 3: I think that that is definitely a way and one 147 00:07:17,960 --> 00:07:20,000 Speaker 3: way that we look at it. So when you take 148 00:07:20,040 --> 00:07:24,400 Speaker 3: a step back, Apollo's business is a seven hundred and 149 00:07:24,440 --> 00:07:27,440 Speaker 3: thirty billion dollar business, of which you know nearly six 150 00:07:27,560 --> 00:07:30,640 Speaker 3: hundred billion dollars was within our credit business, of which 151 00:07:31,040 --> 00:07:33,600 Speaker 3: nearly three hundred billion dollars is from a theine in 152 00:07:33,640 --> 00:07:37,040 Speaker 3: our retirement service business. So a lot of what we 153 00:07:37,080 --> 00:07:39,680 Speaker 3: do when you think about safe yield and safe risk 154 00:07:39,920 --> 00:07:42,880 Speaker 3: is really because we have to manage on behalf of 155 00:07:42,880 --> 00:07:46,120 Speaker 3: our insurance balance sheets, which by definition need to be 156 00:07:46,160 --> 00:07:50,040 Speaker 3: in predominantly investment grade risk. And so we're invested in 157 00:07:50,240 --> 00:07:53,720 Speaker 3: very high quality, top of the capital structure, safe investment 158 00:07:53,720 --> 00:07:57,080 Speaker 3: grade type opportunities by virtue of one needing to from 159 00:07:57,120 --> 00:07:59,680 Speaker 3: a regulatory perspective, but also because we think that you 160 00:07:59,680 --> 00:08:03,320 Speaker 3: can get at outsize and excess return compared to a benchmark, 161 00:08:03,360 --> 00:08:06,320 Speaker 3: and so your point at is well taken, which is 162 00:08:06,760 --> 00:08:09,760 Speaker 3: at measuring excess return per unit of risk is obviously 163 00:08:09,880 --> 00:08:13,680 Speaker 3: one how you outperform visa V volatility in the broader market, 164 00:08:13,840 --> 00:08:16,560 Speaker 3: but also to how you outperform a relative to the 165 00:08:16,600 --> 00:08:19,320 Speaker 3: index that's taking similar risk. When you think about a 166 00:08:19,320 --> 00:08:22,760 Speaker 3: Pollo's credit business, we virtually have no second lean risk. 167 00:08:23,000 --> 00:08:26,120 Speaker 3: We focus on top of the capital structure first lean secured, 168 00:08:26,200 --> 00:08:30,240 Speaker 3: irrespective of investment grade or not. And so from our perspective, 169 00:08:30,360 --> 00:08:33,480 Speaker 3: we still think that you're able to create compelling risk 170 00:08:33,559 --> 00:08:36,079 Speaker 3: reward by attaching higher than the capitol structure. 171 00:08:36,600 --> 00:08:38,920 Speaker 1: I'd get that from an investive perspective, and obviously we've 172 00:08:38,920 --> 00:08:40,800 Speaker 1: had a lot of investors talking about the opportunity from 173 00:08:40,840 --> 00:08:43,920 Speaker 1: that standpoint, but from a borrower's point of view, from 174 00:08:43,960 --> 00:08:46,240 Speaker 1: an issue, and I'd be interested in both of your views, 175 00:08:46,240 --> 00:08:48,080 Speaker 1: because you know, Matt, you cover this day and day out. 176 00:08:48,320 --> 00:08:52,599 Speaker 1: CFO is a very sensitive to the smallest change in 177 00:08:52,840 --> 00:08:55,640 Speaker 1: funding costs. Why should they do it this way? On 178 00:08:55,679 --> 00:08:57,800 Speaker 1: the Facebook it looks more expensive, so why would they 179 00:08:57,840 --> 00:08:58,080 Speaker 1: do it? 180 00:08:58,480 --> 00:08:59,960 Speaker 3: I think it's a great question, and I'll talk about 181 00:08:59,960 --> 00:09:02,200 Speaker 3: it from our perspective, but Matt obviously would love your 182 00:09:02,240 --> 00:09:05,360 Speaker 3: perspective as well, which is I think there are certainly 183 00:09:05,400 --> 00:09:07,680 Speaker 3: there are avenues that you can get access to financial 184 00:09:07,880 --> 00:09:10,520 Speaker 3: you know markets, right, And to your point, James, many 185 00:09:10,640 --> 00:09:13,720 Speaker 3: companies say, okay, when the bank, when the market's open, 186 00:09:13,840 --> 00:09:16,160 Speaker 3: I can go down the path of using the syndicated 187 00:09:16,160 --> 00:09:19,200 Speaker 3: loan market, or syndicated bond market, or syndicated investment grade market, 188 00:09:19,520 --> 00:09:22,360 Speaker 3: and I can dictate my own pricing and my own documents, 189 00:09:22,360 --> 00:09:25,040 Speaker 3: et cetera, and it might be cheaper and there are 190 00:09:25,040 --> 00:09:27,480 Speaker 3: definitely going to be times where a company might choose 191 00:09:27,520 --> 00:09:30,959 Speaker 3: to do that. In our view, we find that oftentimes 192 00:09:31,000 --> 00:09:33,760 Speaker 3: and not always, but oftentimes these companies would like to 193 00:09:33,840 --> 00:09:37,280 Speaker 3: have either a sizable investment, so you know, we did, 194 00:09:37,360 --> 00:09:39,960 Speaker 3: as you know, an eleven billion dollar financing for Intel 195 00:09:40,080 --> 00:09:43,920 Speaker 3: right or we're doing multi billion dollar transactions for sub 196 00:09:44,000 --> 00:09:47,640 Speaker 3: i G companies, and we can provide them certainty of pricing, 197 00:09:47,679 --> 00:09:51,400 Speaker 3: certainty of timing, certainty of execution, confidentiality if it's an 198 00:09:51,520 --> 00:09:54,880 Speaker 3: M and A, you know, a type of environment that 199 00:09:54,920 --> 00:09:58,960 Speaker 3: they're looking to kind of execute in. And oftentimes these 200 00:09:58,960 --> 00:10:01,520 Speaker 3: companies just want to be able to rely on something 201 00:10:01,520 --> 00:10:05,040 Speaker 3: that will be stable. Whereas the banks are definitely there 202 00:10:05,080 --> 00:10:07,720 Speaker 3: and partners to us, they're not always consistent. And while 203 00:10:07,760 --> 00:10:09,760 Speaker 3: it feels great right now, just given where we are 204 00:10:09,760 --> 00:10:11,840 Speaker 3: and the exuberants in the market, there will be a 205 00:10:11,840 --> 00:10:14,040 Speaker 3: time where the banks are inconsistent again. And having those 206 00:10:14,120 --> 00:10:18,000 Speaker 3: additional relationships and having diversity of your capital structure across 207 00:10:18,160 --> 00:10:22,000 Speaker 3: public and private, we're finding CFOs and management teams wanting 208 00:10:22,120 --> 00:10:24,720 Speaker 3: when they think about their forward expectations, So what. 209 00:10:25,679 --> 00:10:27,480 Speaker 4: Type of size are we talking about here that you 210 00:10:27,559 --> 00:10:31,400 Speaker 4: guys could potentially take down. For you highlighted the Intel deal, 211 00:10:31,440 --> 00:10:34,760 Speaker 4: but are you talking to three billion, five billion, twenty billion? 212 00:10:35,679 --> 00:10:37,720 Speaker 4: What's the size that you guys could do if you 213 00:10:37,760 --> 00:10:40,360 Speaker 4: had a treasure CFO call you up and say, hey, 214 00:10:40,400 --> 00:10:41,400 Speaker 4: we'd like to do something here. 215 00:10:41,760 --> 00:10:43,640 Speaker 3: Intel was definitely the largest that we've done, which was 216 00:10:43,679 --> 00:10:46,320 Speaker 3: eleven billion dollars, and that was for obviously an investment 217 00:10:46,360 --> 00:10:50,640 Speaker 3: grade counterpart. Typically, you know, we are doing anywhere between 218 00:10:50,840 --> 00:10:53,480 Speaker 3: one and three billion dollars in our subinvestment grade business, 219 00:10:54,120 --> 00:10:56,280 Speaker 3: and then in our investment grade business we can be 220 00:10:56,440 --> 00:10:59,600 Speaker 3: you know, five plus. So I think it's pretty beneficial 221 00:10:59,640 --> 00:11:02,040 Speaker 3: when you think about some of these companies looking for 222 00:11:02,120 --> 00:11:05,679 Speaker 3: that you know, soul relationship. There is the ability to 223 00:11:05,960 --> 00:11:09,000 Speaker 3: work with them flexibly if things change or circumstances adjust. 224 00:11:09,800 --> 00:11:12,040 Speaker 3: And so I think we're not the only ones doing this. 225 00:11:12,120 --> 00:11:14,560 Speaker 3: Clearly we have peers in the market, but it's not 226 00:11:14,880 --> 00:11:17,520 Speaker 3: that common that you have people that can write one 227 00:11:17,600 --> 00:11:19,720 Speaker 3: to five up to you know, north of ten billion 228 00:11:19,760 --> 00:11:23,040 Speaker 3: dollar transactions. And that's part of you know, the power 229 00:11:23,040 --> 00:11:25,120 Speaker 3: of bringing both our third party investors as well as 230 00:11:25,120 --> 00:11:26,520 Speaker 3: our insurance balance sheets together. 231 00:11:27,040 --> 00:11:27,240 Speaker 2: Yeah. 232 00:11:27,280 --> 00:11:29,720 Speaker 4: No, I mean, I think that's definitely true, just based 233 00:11:29,760 --> 00:11:32,120 Speaker 4: on dry powder and the total size. I just to 234 00:11:32,200 --> 00:11:36,240 Speaker 4: James's point, I do wonder like maybe the what are 235 00:11:36,280 --> 00:11:39,840 Speaker 4: the qualitative factors if I'm sitting in the treasures seat 236 00:11:39,840 --> 00:11:42,040 Speaker 4: at Caterpillar and I can come to market and issue 237 00:11:42,040 --> 00:11:46,360 Speaker 4: across the curve two tens thirties and you know, issuing 238 00:11:46,360 --> 00:11:50,360 Speaker 4: inside of what the IG spreads are for the index 239 00:11:50,400 --> 00:11:53,600 Speaker 4: at you know, seventy five eighty basis points. I'm assuming 240 00:11:53,679 --> 00:11:55,960 Speaker 4: you guys are are going to be charging a higher rate. 241 00:11:56,000 --> 00:11:58,760 Speaker 4: Is that the case? And if that is the case, 242 00:11:58,840 --> 00:12:01,600 Speaker 4: what are some of those ancillary benefits they can get 243 00:12:01,640 --> 00:12:04,200 Speaker 4: that you know, they're sort of doing an opportunity cost 244 00:12:04,360 --> 00:12:06,520 Speaker 4: or trade out for doing the public market. 245 00:12:07,000 --> 00:12:09,360 Speaker 3: Yeah, I would say that we listen, We look at 246 00:12:09,400 --> 00:12:11,559 Speaker 3: the market in terms of competence as well. We cannot 247 00:12:11,600 --> 00:12:14,360 Speaker 3: be completely off side of what the company can achieve 248 00:12:14,400 --> 00:12:16,760 Speaker 3: in the syndicated market because to your point, we won't 249 00:12:16,760 --> 00:12:20,480 Speaker 3: get deals done. Yes, oftentimes we're able to structure excess 250 00:12:20,480 --> 00:12:23,120 Speaker 3: returns for ourselves and our investors. And some of the 251 00:12:23,200 --> 00:12:25,960 Speaker 3: qualitative things are whether it is so when you think 252 00:12:25,960 --> 00:12:28,800 Speaker 3: about an investment grede counterparty right when they're just issuing 253 00:12:28,880 --> 00:12:32,280 Speaker 3: corporate debt, that makes sense. Oftentimes they have two choices. 254 00:12:32,320 --> 00:12:34,520 Speaker 3: They can go down the syndicated path, or they can 255 00:12:34,559 --> 00:12:37,240 Speaker 3: go and try to raise equity. Raising equity has its 256 00:12:37,280 --> 00:12:40,080 Speaker 3: own issues as it relates to dilution as well as 257 00:12:40,120 --> 00:12:42,120 Speaker 3: just kind of control that the company may not want 258 00:12:42,160 --> 00:12:44,840 Speaker 3: to kind of continue to go down the path, or 259 00:12:45,000 --> 00:12:47,840 Speaker 3: if they're looking for more kind of bespoke financing, so 260 00:12:48,280 --> 00:12:51,440 Speaker 3: we want to create a financing against our chip manufacturer, 261 00:12:51,559 --> 00:12:54,520 Speaker 3: or we have more project finance opportunity that we need 262 00:12:54,840 --> 00:12:58,240 Speaker 3: multi billion dollar financing against. That takes a lot of diligence, 263 00:12:58,280 --> 00:13:00,120 Speaker 3: that takes a lot of time, that is not as 264 00:13:00,160 --> 00:13:04,040 Speaker 3: straightforward to conduct in the public markets, and so we 265 00:13:04,120 --> 00:13:06,800 Speaker 3: can actually bring that complexity to bear. In the case 266 00:13:06,840 --> 00:13:09,840 Speaker 3: of Intel, it was a really interesting opportunity because the 267 00:13:09,920 --> 00:13:12,680 Speaker 3: company did not want to take on more debt because 268 00:13:12,679 --> 00:13:15,080 Speaker 3: of just pressures in terms of leverage on their overall 269 00:13:15,120 --> 00:13:18,199 Speaker 3: capital structure. They wanted to structure it as equity. So 270 00:13:18,240 --> 00:13:21,320 Speaker 3: we did a minority equity position that we then worked 271 00:13:21,320 --> 00:13:24,880 Speaker 3: with various rating agencies and the like to figure out 272 00:13:24,880 --> 00:13:27,320 Speaker 3: how do we make this applicable and the best outcome 273 00:13:27,360 --> 00:13:29,920 Speaker 3: for insurance balance sheets. So being able to bring that 274 00:13:30,000 --> 00:13:33,400 Speaker 3: customized solution where you're optimizing for the company's balance sheet 275 00:13:33,720 --> 00:13:36,680 Speaker 3: alongside what we need to achieve for our investors is 276 00:13:36,720 --> 00:13:39,319 Speaker 3: pretty unique. But I would agree with you, Matt, if 277 00:13:39,320 --> 00:13:41,560 Speaker 3: it's kind of more of vanilla down the fairway. Yes, 278 00:13:41,679 --> 00:13:43,320 Speaker 3: you may just say, listen, I'm going to go down 279 00:13:43,320 --> 00:13:45,040 Speaker 3: the curve. I'm going to issue my debt as needed. 280 00:13:45,360 --> 00:13:47,600 Speaker 3: But I think as these companies look for strategic m 281 00:13:47,640 --> 00:13:50,160 Speaker 3: and A, whether they look for current a more infrastructure 282 00:13:50,200 --> 00:13:53,560 Speaker 3: or project based finance opportunities, you're going to need a 283 00:13:53,559 --> 00:13:56,640 Speaker 3: more flexible capital structure that can span equity to credit 284 00:13:56,920 --> 00:13:58,200 Speaker 3: and be all the things in between. 285 00:13:58,600 --> 00:14:01,920 Speaker 4: So kind of keeping in that idea of funding for 286 00:14:02,040 --> 00:14:04,000 Speaker 4: different projects, how do you sort of view this idea 287 00:14:04,000 --> 00:14:08,040 Speaker 4: of the energy, energy transition and infrastructure investment is industrial 288 00:14:08,120 --> 00:14:10,200 Speaker 4: is going to be a sector where you guys feel 289 00:14:10,240 --> 00:14:11,959 Speaker 4: like you're going to see a ton of growth from 290 00:14:12,040 --> 00:14:15,719 Speaker 4: a private private credit standpoint, given guys like Caterpillar of 291 00:14:15,800 --> 00:14:19,280 Speaker 4: highlighted bullish views over the next five ten years for 292 00:14:19,720 --> 00:14:22,280 Speaker 4: their mining business, given the need for commodities like copper, 293 00:14:22,440 --> 00:14:26,200 Speaker 4: lithium and nickel, and you know, you look at ARPA 294 00:14:26,560 --> 00:14:29,040 Speaker 4: has spent just a fraction of the funds that are 295 00:14:29,080 --> 00:14:32,960 Speaker 4: available through the IIJA. So how do you see that 296 00:14:33,040 --> 00:14:35,440 Speaker 4: sort of unfurling over the intermediate term? 297 00:14:36,120 --> 00:14:37,280 Speaker 2: I think I think you're spot on. 298 00:14:37,360 --> 00:14:40,760 Speaker 3: I think that we believe, like most believe, that there 299 00:14:40,920 --> 00:14:43,040 Speaker 3: is going to be whether you call it an industrial 300 00:14:43,080 --> 00:14:46,280 Speaker 3: revolution or whether you focus you talk about energy transition. 301 00:14:46,720 --> 00:14:49,560 Speaker 3: I read recently we're talking about energy not just transition, 302 00:14:49,720 --> 00:14:52,280 Speaker 3: energy addition. So there are a lot of different terms 303 00:14:52,280 --> 00:14:55,160 Speaker 3: as it relates to kind of how do you capitalize 304 00:14:55,200 --> 00:14:58,160 Speaker 3: on what will be both you know, AI technology as 305 00:14:58,200 --> 00:15:01,160 Speaker 3: well as data center infrastructure. And then it's the data 306 00:15:01,160 --> 00:15:04,240 Speaker 3: center infrastructure that marries with what goes on with real 307 00:15:04,320 --> 00:15:07,880 Speaker 3: estate associated with the with those projects that is married 308 00:15:07,880 --> 00:15:10,360 Speaker 3: with the chip manufacturers that produce a GPUs that are 309 00:15:10,360 --> 00:15:13,280 Speaker 3: needed in the data center. So there is a lot there, 310 00:15:13,320 --> 00:15:15,440 Speaker 3: I think in our view, and whether you believe you know, 311 00:15:15,600 --> 00:15:18,640 Speaker 3: estimates of you know, multi trillion dollars that is going 312 00:15:18,640 --> 00:15:21,560 Speaker 3: to be needed to be invested in that broader ecosystem, 313 00:15:21,840 --> 00:15:23,200 Speaker 3: you know, we certainly think it's going to be a 314 00:15:23,240 --> 00:15:26,480 Speaker 3: growing need, and so we agree we think that that's going. 315 00:15:26,400 --> 00:15:27,600 Speaker 2: To be a large area. 316 00:15:28,080 --> 00:15:32,400 Speaker 3: Obviously, not all data centers, not all regions in which 317 00:15:32,440 --> 00:15:35,160 Speaker 3: you're building infrastructure. Not all commodities, to your point, will 318 00:15:35,200 --> 00:15:37,720 Speaker 3: be created equal, but our view is that that will 319 00:15:37,760 --> 00:15:41,760 Speaker 3: be a really interesting opportunity. You know, Apollo has a 320 00:15:41,800 --> 00:15:44,560 Speaker 3: climate business, you know, and an energy infrastructure business and 321 00:15:44,600 --> 00:15:48,760 Speaker 3: an energy equity as well as climate debt business, and 322 00:15:48,800 --> 00:15:51,080 Speaker 3: so we're just starting to build and we want to 323 00:15:51,080 --> 00:15:53,680 Speaker 3: make sure that we are assessing projects in the like 324 00:15:54,360 --> 00:15:56,480 Speaker 3: fairly inappropriately. But we think that that will be a 325 00:15:56,480 --> 00:15:58,640 Speaker 3: big theme for our investment over the next five to 326 00:15:58,680 --> 00:15:59,120 Speaker 3: ten years. 327 00:16:00,040 --> 00:16:02,560 Speaker 1: To what's the extent is this kind of lending being 328 00:16:02,640 --> 00:16:05,440 Speaker 1: used to help investment grade companies avoid being cut to 329 00:16:05,520 --> 00:16:09,760 Speaker 1: junk in the example, for example, a triple B company 330 00:16:09,800 --> 00:16:13,040 Speaker 1: that cannot take on more leverage without losing its rating 331 00:16:13,400 --> 00:16:15,800 Speaker 1: once to borrow, but you know, we'll offer assets to 332 00:16:15,840 --> 00:16:18,920 Speaker 1: be secured against those, you know, to do that. Maybe 333 00:16:18,920 --> 00:16:20,600 Speaker 1: it's off the bounds sheet. I don't know, but is 334 00:16:20,600 --> 00:16:22,040 Speaker 1: that part of the equation here. 335 00:16:22,400 --> 00:16:26,280 Speaker 3: Absolutely, absolutely, we are trying to ensure I mean, listen, 336 00:16:26,280 --> 00:16:28,640 Speaker 3: I think that there are companies that might be fallen 337 00:16:28,680 --> 00:16:31,120 Speaker 3: angels over time, that probably deserve to be fallen agents 338 00:16:31,280 --> 00:16:34,760 Speaker 3: or angels over time, and it's not our goal to 339 00:16:34,840 --> 00:16:37,320 Speaker 3: save those companies, so to speak. But I think it 340 00:16:37,360 --> 00:16:39,880 Speaker 3: is in our purview to work with those companies to 341 00:16:39,880 --> 00:16:42,880 Speaker 3: figure out ways that they can keep their rating but 342 00:16:42,920 --> 00:16:45,360 Speaker 3: still get the capital that they need in a way 343 00:16:45,400 --> 00:16:48,200 Speaker 3: that's prudent for their balance sheet. And optimizing their balance 344 00:16:48,240 --> 00:16:50,320 Speaker 3: sheet in partnership with what we can bring to bear 345 00:16:50,400 --> 00:16:51,680 Speaker 3: is definitely a key thing for us. 346 00:16:52,280 --> 00:16:55,360 Speaker 1: And when we're looking at the broad pie all this stuff, 347 00:16:55,400 --> 00:16:57,400 Speaker 1: you know, on the asset based side, a lot of 348 00:16:57,400 --> 00:17:01,240 Speaker 1: its consumer stuff, which is you know, very widely dispersed, 349 00:17:01,560 --> 00:17:03,600 Speaker 1: and there's a lots of it. How do you source 350 00:17:03,600 --> 00:17:04,240 Speaker 1: those assets? 351 00:17:04,920 --> 00:17:07,600 Speaker 3: Yeah, so Apollo has actually spent you know, I spent 352 00:17:07,800 --> 00:17:10,119 Speaker 3: some time talking about Athene. But a Theene, as I mentioned, 353 00:17:10,240 --> 00:17:14,320 Speaker 3: is our retirement service insurance company. It's a fixinuity business 354 00:17:14,359 --> 00:17:16,439 Speaker 3: and its most basic format that we started in two 355 00:17:16,440 --> 00:17:19,040 Speaker 3: thousand and nine, and because of a lot of the 356 00:17:19,040 --> 00:17:22,720 Speaker 3: investment grade investments that it needed, we couldn't just source 357 00:17:22,760 --> 00:17:24,480 Speaker 3: all of that from the corporate credit markets, and so 358 00:17:24,560 --> 00:17:27,960 Speaker 3: we decided over the last thirteen years to either build 359 00:17:28,040 --> 00:17:32,440 Speaker 3: or buy. You know, we have ten sixteen different platforms 360 00:17:32,480 --> 00:17:36,880 Speaker 3: excuse me that either are originating you know, any sort 361 00:17:36,920 --> 00:17:39,280 Speaker 3: of asset based finance. And we have another twenty five 362 00:17:39,359 --> 00:17:41,919 Speaker 3: plus that we have relationships with. So we have a 363 00:17:41,960 --> 00:17:46,000 Speaker 3: really broad ecosystem that is originating private asset based finance, 364 00:17:46,040 --> 00:17:50,760 Speaker 3: from aircraft finance to real estate to consumer to trade 365 00:17:50,760 --> 00:17:53,560 Speaker 3: finance and the like. And so we have these platforms 366 00:17:53,560 --> 00:17:56,560 Speaker 3: that are in the market every single day an assessing risk. 367 00:17:56,760 --> 00:18:00,639 Speaker 3: It doesn't necessarily mean that we're always very long aircraft lending. 368 00:18:00,680 --> 00:18:02,439 Speaker 3: It just means that we have the capability to do that. 369 00:18:02,840 --> 00:18:06,720 Speaker 3: And all of these platforms are also market participants, right, 370 00:18:06,760 --> 00:18:10,160 Speaker 3: so we provide those types of financings to other market participants. 371 00:18:09,680 --> 00:18:10,800 Speaker 2: Should they should they want them. 372 00:18:11,520 --> 00:18:14,199 Speaker 3: As you know, we culminated kind of our I shouldn't 373 00:18:14,200 --> 00:18:17,280 Speaker 3: say culminated, but part of our kind of you know, 374 00:18:17,680 --> 00:18:20,480 Speaker 3: growth within the platform business was the purchase of credits 375 00:18:20,440 --> 00:18:23,040 Speaker 3: with the Securitized Product Group, which we did in February 376 00:18:23,040 --> 00:18:25,199 Speaker 3: of last year, which is now called Atlas, which is 377 00:18:25,240 --> 00:18:28,240 Speaker 3: kind of a warehouse finance business. And so to your point, 378 00:18:28,400 --> 00:18:31,920 Speaker 3: we believe that there is a lot of different risk 379 00:18:31,960 --> 00:18:34,520 Speaker 3: and reward available with an asset based finance. The consumer, 380 00:18:34,560 --> 00:18:38,119 Speaker 3: to your point, is a big focus area of ours. 381 00:18:38,440 --> 00:18:41,360 Speaker 3: We're kind of bifurcating the consumer now, right because there 382 00:18:41,400 --> 00:18:45,000 Speaker 3: is obviously consumers that we think will be more at risk, 383 00:18:45,280 --> 00:18:48,280 Speaker 3: and we're actually focusing on consumers at our homeowners and 384 00:18:48,359 --> 00:18:52,520 Speaker 3: high fi coscore consumers when we're dealing with that sort 385 00:18:52,520 --> 00:18:57,679 Speaker 3: of lending opportunity, and so we're long kind of consumer lending. 386 00:18:57,840 --> 00:19:00,880 Speaker 3: If the end consumer meets the criteria that we think 387 00:19:00,920 --> 00:19:04,679 Speaker 3: is high quality. We believe that there is opportunity in 388 00:19:04,760 --> 00:19:09,000 Speaker 3: residential real estate. We have select commercial real estate. In 389 00:19:09,040 --> 00:19:11,639 Speaker 3: financial assets, you know, we are focused more on kind 390 00:19:11,680 --> 00:19:15,000 Speaker 3: of bank transfer and SRTs and right now we're a 391 00:19:15,000 --> 00:19:16,880 Speaker 3: little bit more bearish on the hard assets. 392 00:19:17,320 --> 00:19:20,240 Speaker 1: And you bundle all those up into a structure and 393 00:19:20,560 --> 00:19:22,920 Speaker 1: you know, you sell that on how do you monitor 394 00:19:22,960 --> 00:19:24,800 Speaker 1: the underlying you know, what do you do to track that? 395 00:19:24,920 --> 00:19:27,520 Speaker 1: And how do you I mean it's not something you're 396 00:19:27,600 --> 00:19:29,959 Speaker 1: constantly putting a mark on. I mean, it's not traded, 397 00:19:30,000 --> 00:19:30,960 Speaker 1: So what do you what do you how do you 398 00:19:31,000 --> 00:19:31,399 Speaker 1: value it? 399 00:19:31,560 --> 00:19:32,840 Speaker 2: Yeah, no, it's it's a great question. 400 00:19:32,920 --> 00:19:35,199 Speaker 3: We have I'm going to get the number wrong, but 401 00:19:35,240 --> 00:19:38,960 Speaker 3: we have, you know, dozens of quants that are every 402 00:19:38,960 --> 00:19:41,440 Speaker 3: single to your point, every one of these loans, every 403 00:19:41,440 --> 00:19:44,480 Speaker 3: one of these asset categories is super complex and you 404 00:19:44,560 --> 00:19:46,960 Speaker 3: need to monitor and they're not the same, right, Well, 405 00:19:46,960 --> 00:19:50,560 Speaker 3: how you would value kind of a trade finance opportunity 406 00:19:50,640 --> 00:19:54,199 Speaker 3: versus an SRT versus a residential mortgage loan, even if 407 00:19:54,240 --> 00:19:57,200 Speaker 3: on a pooled basis, is very different. And so we 408 00:19:57,320 --> 00:19:59,840 Speaker 3: have many people that are focused every day in terms 409 00:19:59,840 --> 00:20:02,960 Speaker 3: of how do we assess them, what are the key attributes, 410 00:20:03,000 --> 00:20:05,640 Speaker 3: where do we figure we're delinquencies following, what are recoveries 411 00:20:05,640 --> 00:20:08,199 Speaker 3: looking like? And if we think about our business, you know, 412 00:20:08,400 --> 00:20:10,920 Speaker 3: we have deployed over two hundred billion dollars in asset 413 00:20:10,920 --> 00:20:12,840 Speaker 3: base finance and we've had you know, less than a 414 00:20:12,840 --> 00:20:15,520 Speaker 3: one point three basis point loss, you know, since the 415 00:20:15,560 --> 00:20:17,919 Speaker 3: history of us doing it. So our focus on very 416 00:20:18,000 --> 00:20:20,440 Speaker 3: high quality investment grade risk does protect. 417 00:20:20,040 --> 00:20:20,719 Speaker 2: In some ways. 418 00:20:21,160 --> 00:20:23,800 Speaker 3: And then we are you know, we have strategies and 419 00:20:23,840 --> 00:20:26,600 Speaker 3: funds to your point, that are marked on a monthly basis, 420 00:20:26,640 --> 00:20:29,480 Speaker 3: and so we have to get outside, you know, arms 421 00:20:29,520 --> 00:20:33,280 Speaker 3: length valuation agents to work with our internal capabilities to 422 00:20:33,320 --> 00:20:36,040 Speaker 3: make sure that we are providing that transparency to investors. 423 00:20:36,320 --> 00:20:40,520 Speaker 4: What are those of those generally illiquid like if if 424 00:20:40,600 --> 00:20:43,280 Speaker 4: we're looking at this from an investment standpoint, am I 425 00:20:43,320 --> 00:20:47,040 Speaker 4: trading off higher returns for less liquidity? In the primary 426 00:20:47,080 --> 00:20:49,520 Speaker 4: market or the private market versus. 427 00:20:49,240 --> 00:20:52,960 Speaker 3: Public Yeah, I think that our view is that generally speaking, 428 00:20:53,080 --> 00:20:55,600 Speaker 3: you can get between one hundred and fifty to two 429 00:20:55,680 --> 00:20:58,119 Speaker 3: hundred basis points. You know, depends on the market. So 430 00:20:58,119 --> 00:21:00,720 Speaker 3: maybe one hundred to two hundred basis points of excess 431 00:21:00,760 --> 00:21:05,000 Speaker 3: spread compared to the public markets because they are less liquid, 432 00:21:05,080 --> 00:21:07,560 Speaker 3: But it depends on the asset class. So for example, 433 00:21:08,000 --> 00:21:11,520 Speaker 3: when you think about you know, corporate investment grade risk, 434 00:21:11,960 --> 00:21:15,000 Speaker 3: you know those are as you know, kind of maturities 435 00:21:15,040 --> 00:21:17,560 Speaker 3: of ten, fifteen, twenty five years, and so that is 436 00:21:17,640 --> 00:21:20,199 Speaker 3: obviously you know, quote unquote less liquid or you know, 437 00:21:20,240 --> 00:21:21,280 Speaker 3: has a longer maturity. 438 00:21:21,280 --> 00:21:22,600 Speaker 2: But in a world where people. 439 00:21:22,359 --> 00:21:25,679 Speaker 3: Want duration, that's a good thing in asset base. If 440 00:21:25,680 --> 00:21:28,080 Speaker 3: you're thinking about warehouses, you know, those are six to 441 00:21:28,119 --> 00:21:31,920 Speaker 3: eighteen month kind of warehouses that are available, and so yes, 442 00:21:32,000 --> 00:21:34,879 Speaker 3: is it kind of difficult to necessarily transact on a 443 00:21:34,960 --> 00:21:37,080 Speaker 3: day to day basis, perhaps, but you're also looking at 444 00:21:37,080 --> 00:21:37,840 Speaker 3: shorter maturity. 445 00:21:37,880 --> 00:21:40,320 Speaker 2: So I think that our control of the. 446 00:21:40,280 --> 00:21:44,719 Speaker 3: Ecosystem and the ability to provide that bespoke financing in 447 00:21:44,760 --> 00:21:47,159 Speaker 3: a way that's cornered candidly a big part of the 448 00:21:47,200 --> 00:21:49,159 Speaker 3: market allows us to create that access return. 449 00:21:49,680 --> 00:21:51,679 Speaker 1: But you told to investors about this. I guess all 450 00:21:51,720 --> 00:21:54,399 Speaker 1: the time now when you're fundraising and you're talking about 451 00:21:54,760 --> 00:21:58,080 Speaker 1: more return for less risk, some of them must say, well, 452 00:21:58,080 --> 00:21:59,399 Speaker 1: that's just too good to be true. What do you 453 00:21:59,400 --> 00:22:00,560 Speaker 1: tell them response? 454 00:22:01,119 --> 00:22:03,000 Speaker 2: It's a good question. Many people do say it's too 455 00:22:03,040 --> 00:22:03,760 Speaker 2: good to be true. 456 00:22:04,080 --> 00:22:06,199 Speaker 3: I think that we say that it depends on what 457 00:22:06,280 --> 00:22:08,000 Speaker 3: it's what it's relative to. So I would say a 458 00:22:08,040 --> 00:22:10,359 Speaker 3: couple things. So I think we talked to investors. You know, 459 00:22:10,400 --> 00:22:13,720 Speaker 3: we spend a time across the globe talking to investors 460 00:22:13,720 --> 00:22:16,399 Speaker 3: in every you know, region has different nuances and what 461 00:22:16,440 --> 00:22:19,240 Speaker 3: they're objectives that they're trying to achieve. I would say 462 00:22:19,240 --> 00:22:23,240 Speaker 3: that when you think about traditional aults, right, and the 463 00:22:23,480 --> 00:22:26,159 Speaker 3: risk return that investors expect out of that bucket, I 464 00:22:26,160 --> 00:22:28,800 Speaker 3: would say that those are those are high returns, and 465 00:22:28,840 --> 00:22:31,359 Speaker 3: many of them have be able to achieve it, whether 466 00:22:31,359 --> 00:22:34,199 Speaker 3: that's through private credit that is corporate but more in 467 00:22:34,200 --> 00:22:37,600 Speaker 3: the subordinated end, whether that's through you know, more equity 468 00:22:37,720 --> 00:22:40,840 Speaker 3: like risk, or even through to private equity. And we're 469 00:22:40,880 --> 00:22:43,800 Speaker 3: saying that we actually don't, you know, in our credit business, 470 00:22:44,119 --> 00:22:46,359 Speaker 3: we're not targeting those types of returns we're saying, actually, 471 00:22:46,400 --> 00:22:49,639 Speaker 3: we will return lower than that, but we will do 472 00:22:49,680 --> 00:22:52,240 Speaker 3: it with safer risk. Well, we're saying we're going to 473 00:22:52,240 --> 00:22:54,760 Speaker 3: get you more return. Is in the fixed income market 474 00:22:54,760 --> 00:22:58,240 Speaker 3: in particular, where we're saying, you're invested in daily liquid product, 475 00:22:58,960 --> 00:23:01,120 Speaker 3: Why are you doing that? You're doing that because you 476 00:23:01,480 --> 00:23:04,439 Speaker 3: think that you need daily liquidity. Do you actually need 477 00:23:04,480 --> 00:23:08,600 Speaker 3: daily liquidity? Also, the daily liquid indices aren't daily liquid 478 00:23:08,680 --> 00:23:10,879 Speaker 3: right when when you look at the underlying constituents of 479 00:23:10,880 --> 00:23:14,200 Speaker 3: the investment grade market, fifty depending on which study you 480 00:23:14,240 --> 00:23:16,560 Speaker 3: look at or which analysis you do, fifty to seventy 481 00:23:16,600 --> 00:23:20,439 Speaker 3: percent are in smaller odd lot deals or legacy, you know, 482 00:23:21,000 --> 00:23:24,160 Speaker 3: older maturity type of transactions, which just do not transact 483 00:23:24,160 --> 00:23:26,840 Speaker 3: that easy on a single name basis. The indicies are 484 00:23:26,880 --> 00:23:30,640 Speaker 3: misleading because they're so they're so concentrated at the top 485 00:23:30,720 --> 00:23:32,320 Speaker 3: end of the market that it makes it seem like 486 00:23:32,359 --> 00:23:35,160 Speaker 3: it's more liquid. And what we're saying is actually, one, 487 00:23:35,440 --> 00:23:39,399 Speaker 3: your etfsen, your liquid, your liquid is exposure is not 488 00:23:39,440 --> 00:23:41,720 Speaker 3: that liquid. And two, if you come with us and 489 00:23:41,760 --> 00:23:44,000 Speaker 3: you kind of take a portion of your portfolio and 490 00:23:44,160 --> 00:23:46,520 Speaker 3: just think about doing a little bit less liquid, you 491 00:23:46,560 --> 00:23:49,399 Speaker 3: can increase a portion of your spread on that portion. 492 00:23:49,920 --> 00:23:52,480 Speaker 4: Yeah, I mean that that's definitely a strategy, at least 493 00:23:52,520 --> 00:23:56,280 Speaker 4: within investment grade corporates, is to sort of buy the 494 00:23:56,560 --> 00:23:58,680 Speaker 4: off the run issue that trades a little bit wider, 495 00:23:58,720 --> 00:24:00,800 Speaker 4: so you're giving up some liquidity, but you're picking up 496 00:24:00,800 --> 00:24:03,360 Speaker 4: a lot more spread relative to some on the run issues. 497 00:24:03,920 --> 00:24:06,320 Speaker 4: Is that sort of the secret sauce here, because I 498 00:24:06,320 --> 00:24:08,679 Speaker 4: think you guys have have highlighted or at least put 499 00:24:08,680 --> 00:24:12,479 Speaker 4: out some some white papers pointing out that the private 500 00:24:12,480 --> 00:24:14,800 Speaker 4: IG allocation, you guys can pick up about three hundred 501 00:24:14,800 --> 00:24:19,560 Speaker 4: base points of excess spread and it looks like that's 502 00:24:19,720 --> 00:24:22,920 Speaker 4: more or less a liquidity train off between daily marking 503 00:24:22,960 --> 00:24:26,880 Speaker 4: and monthly But you know that's I mean three inderd 504 00:24:26,880 --> 00:24:29,040 Speaker 4: base points. We're talking about something that right now is 505 00:24:29,040 --> 00:24:32,920 Speaker 4: at least wider than the high yield US Corporate Index. 506 00:24:33,080 --> 00:24:35,760 Speaker 4: And you know, we had Matt Brill, who is the 507 00:24:35,760 --> 00:24:38,480 Speaker 4: head of Investment Great Credit from Investco at our year 508 00:24:38,600 --> 00:24:41,040 Speaker 4: end outlookment last year who said, we're you know, we're 509 00:24:41,040 --> 00:24:42,840 Speaker 4: at like seventy five eighty base points on the IG 510 00:24:42,960 --> 00:24:45,040 Speaker 4: index and we're going to fifty five and twenty five 511 00:24:45,080 --> 00:24:48,720 Speaker 4: next year, which is is pretty tight so can you 512 00:24:48,760 --> 00:24:52,200 Speaker 4: maybe unpack how you guys are picking up so much 513 00:24:52,240 --> 00:24:55,320 Speaker 4: more spread relative to the sort of be the traditional 514 00:24:55,320 --> 00:25:00,320 Speaker 4: benchmark indicies. Clearly there's shortcomings that you clearly pointed out 515 00:25:00,320 --> 00:25:05,160 Speaker 4: and obviously in the student observation, but three hundred overs 516 00:25:05,200 --> 00:25:06,000 Speaker 4: is pretty impressive. 517 00:25:06,480 --> 00:25:09,920 Speaker 3: Yeah, three hundred over is a it's significant to your point, 518 00:25:10,440 --> 00:25:14,480 Speaker 3: and part of that is the kind of bespoke transactions 519 00:25:14,480 --> 00:25:17,040 Speaker 3: that we will do for the intels of the world, 520 00:25:17,160 --> 00:25:20,879 Speaker 3: or for Air France, or for Sony or for Anheiser 521 00:25:20,880 --> 00:25:22,280 Speaker 3: Bush that you've seen that we've done over the last 522 00:25:22,280 --> 00:25:25,240 Speaker 3: few years, which are multi billion dollars that are structured 523 00:25:25,280 --> 00:25:28,000 Speaker 3: in a way that either kind of look and feel 524 00:25:28,240 --> 00:25:31,359 Speaker 3: to the company equity like. But still, you know, we 525 00:25:31,400 --> 00:25:34,600 Speaker 3: can get rated through our own through third party rating 526 00:25:34,600 --> 00:25:38,159 Speaker 3: agencies that give us beneficial kind of treatment because the 527 00:25:38,240 --> 00:25:40,840 Speaker 3: underlying and the look through is clearly investment rate and 528 00:25:40,880 --> 00:25:44,359 Speaker 3: clearly incredibly high quality. And so that's one way that 529 00:25:44,400 --> 00:25:46,160 Speaker 3: you get access spread is through kind of doing these 530 00:25:46,280 --> 00:25:48,800 Speaker 3: very large transactions with corporates that are off balance sheet 531 00:25:48,880 --> 00:25:52,359 Speaker 3: that look and feel different and optimize for their own concerns. 532 00:25:52,720 --> 00:25:55,679 Speaker 3: And the second way is in our asset base finance business, 533 00:25:55,720 --> 00:25:58,679 Speaker 3: right in our warehouse business, and in all the different 534 00:25:58,680 --> 00:26:01,119 Speaker 3: areas that we are leaning into. I think one of 535 00:26:01,160 --> 00:26:03,520 Speaker 3: the things that you know when you think about and 536 00:26:03,560 --> 00:26:06,440 Speaker 3: this has been an education for ourselves internally as well 537 00:26:06,440 --> 00:26:07,159 Speaker 3: as externally. 538 00:26:07,200 --> 00:26:08,560 Speaker 2: And we'll see if we're successful. 539 00:26:08,600 --> 00:26:11,160 Speaker 3: Like there's no guarantees in life, but you know, when 540 00:26:11,200 --> 00:26:14,440 Speaker 3: you think about an investment grade, you know, in exposure. 541 00:26:14,480 --> 00:26:17,159 Speaker 3: When you look at the typical public pension plan or 542 00:26:17,160 --> 00:26:19,760 Speaker 3: you look at the typical institutional investor, the majority of 543 00:26:19,760 --> 00:26:22,159 Speaker 3: what they're doing is in corporate to your point, matt On, 544 00:26:22,440 --> 00:26:24,800 Speaker 3: you know, buying the index and getting exposure to both 545 00:26:24,840 --> 00:26:26,959 Speaker 3: off the run and on the run exposure and bonds. 546 00:26:27,440 --> 00:26:29,959 Speaker 3: Our view is that, you know, that is one area 547 00:26:30,160 --> 00:26:33,280 Speaker 3: to get investment grade exposure, but also asset base finance 548 00:26:33,320 --> 00:26:37,159 Speaker 3: where you can get higher yields right now, and you 549 00:26:37,240 --> 00:26:39,320 Speaker 3: can if you are able to pick your spots across 550 00:26:39,320 --> 00:26:43,080 Speaker 3: a very diverse set of opportunities, you can really be 551 00:26:43,160 --> 00:26:46,399 Speaker 3: able to achieve a little bit of excess spread married 552 00:26:46,440 --> 00:26:50,760 Speaker 3: with some of these larger private corporate opportunities. That's how 553 00:26:50,800 --> 00:26:52,479 Speaker 3: we kind of get to the math of getting you 554 00:26:52,520 --> 00:26:54,960 Speaker 3: to that, you know, multi hundred basis points of exs. 555 00:26:54,800 --> 00:26:57,639 Speaker 1: Spread today, is it sustainable? I mean, can you continue 556 00:26:57,680 --> 00:26:58,800 Speaker 1: to make that next year and the year. 557 00:26:58,720 --> 00:26:59,840 Speaker 2: Off to I think it's going to be. 558 00:27:00,119 --> 00:27:02,199 Speaker 3: And I think that we our view is that the 559 00:27:02,200 --> 00:27:05,640 Speaker 3: private markets are only expanding, right, And so I think 560 00:27:05,680 --> 00:27:09,119 Speaker 3: that if you believe like we do, that public markets 561 00:27:09,119 --> 00:27:11,720 Speaker 3: and private markets are going to converge and that means 562 00:27:11,720 --> 00:27:15,120 Speaker 3: that private markets will likely expand, then yeah, there might 563 00:27:15,160 --> 00:27:18,399 Speaker 3: be some spread compression, right because you will see more 564 00:27:18,680 --> 00:27:21,760 Speaker 3: private credit becoming more and more mainstream, which would define 565 00:27:21,760 --> 00:27:25,240 Speaker 3: you to have more compression and spread. I think that 566 00:27:25,359 --> 00:27:29,040 Speaker 3: as long as we can continue to be discerning and 567 00:27:29,560 --> 00:27:32,640 Speaker 3: not have to put out risk. So what I mean 568 00:27:32,640 --> 00:27:35,040 Speaker 3: by that is we don't have a business where we 569 00:27:35,160 --> 00:27:37,600 Speaker 3: have to put out x hundred million or x billion 570 00:27:37,640 --> 00:27:40,800 Speaker 3: dollars in resume marketers. We can be like, okay, resine 571 00:27:40,800 --> 00:27:42,560 Speaker 3: marketers right now are interesting or not interesting, and we 572 00:27:42,600 --> 00:27:46,320 Speaker 3: can really ascertain and then within that where are the 573 00:27:46,320 --> 00:27:48,679 Speaker 3: interesting areas to be in to not be? And so 574 00:27:48,920 --> 00:27:52,200 Speaker 3: I think if you are able to app consistently try 575 00:27:52,240 --> 00:27:56,320 Speaker 3: to uncover where the relative value is, you should be 576 00:27:56,359 --> 00:27:58,439 Speaker 3: able to outperform. But to your point is that what 577 00:27:58,520 --> 00:28:00,000 Speaker 3: is the magnitude? I think that remains to be sae. 578 00:28:00,600 --> 00:28:03,680 Speaker 1: One of our guests recently said, in the contexts of 579 00:28:03,720 --> 00:28:06,320 Speaker 1: this market and the growth of it, everyone wants to 580 00:28:06,320 --> 00:28:09,399 Speaker 1: be Apollo, which is obviously flattering, but also there's a 581 00:28:09,440 --> 00:28:11,720 Speaker 1: target on your on your back. So how do you 582 00:28:11,720 --> 00:28:13,520 Speaker 1: stay ahead? I mean, what what do you how do 583 00:28:13,560 --> 00:28:15,840 Speaker 1: you innovate? How do you I mean, it can't all 584 00:28:15,880 --> 00:28:19,159 Speaker 1: just be scale. Obviously you were there a bit earlier, 585 00:28:19,200 --> 00:28:21,080 Speaker 1: but you know, how do you maintain that edge? 586 00:28:21,359 --> 00:28:23,119 Speaker 3: It's very it's very kind that your guests said that, 587 00:28:23,160 --> 00:28:24,440 Speaker 3: but but I but I do appreciate. 588 00:28:24,520 --> 00:28:25,520 Speaker 2: I think from. 589 00:28:25,359 --> 00:28:29,320 Speaker 3: Our perspective, you know, we I would say Mark is 590 00:28:29,359 --> 00:28:32,399 Speaker 3: done and Marcron has done an incredible job about trying 591 00:28:32,440 --> 00:28:35,399 Speaker 3: to figure out where is the puck going and so 592 00:28:35,800 --> 00:28:39,840 Speaker 3: whether that was the evolution of our you know, exposure 593 00:28:39,840 --> 00:28:43,000 Speaker 3: to private credit building beyond just direct lending, through to 594 00:28:43,280 --> 00:28:47,560 Speaker 3: asset base, through to investment grade now kind of you know, 595 00:28:47,600 --> 00:28:50,920 Speaker 3: we've built our business candidly in our third party investment 596 00:28:50,960 --> 00:28:54,520 Speaker 3: business or through a party capital business, predominantly via the 597 00:28:54,560 --> 00:28:57,360 Speaker 3: alt's bucket right, which which we've talked about. I think 598 00:28:57,360 --> 00:29:01,880 Speaker 3: it was pretty it's pretty interesting that we're now thinking 599 00:29:01,920 --> 00:29:05,240 Speaker 3: about Okay, how do we utilize or really vast experience 600 00:29:05,320 --> 00:29:08,920 Speaker 3: via retirement service business to think about the fix income allocation, 601 00:29:08,960 --> 00:29:10,720 Speaker 3: which is a completely different part of the portfolio that 602 00:29:10,760 --> 00:29:12,600 Speaker 3: we weren't really necessarily targeting before. 603 00:29:13,360 --> 00:29:14,800 Speaker 2: And so I think just trying. 604 00:29:14,520 --> 00:29:17,600 Speaker 3: To make sure that we are understanding where trends are 605 00:29:17,640 --> 00:29:21,360 Speaker 3: going and how to really make the most sense for investors' 606 00:29:21,360 --> 00:29:24,520 Speaker 3: balance sheets. Part of the reason why some people lose 607 00:29:24,560 --> 00:29:27,400 Speaker 3: and we haven't been immune to this either, is they 608 00:29:27,600 --> 00:29:29,200 Speaker 3: come up with an idea that makes a lot of 609 00:29:29,200 --> 00:29:31,520 Speaker 3: sense for their business, and then it's about how do 610 00:29:31,600 --> 00:29:34,080 Speaker 3: you get that into and investor's hands and commercialize that 611 00:29:34,600 --> 00:29:37,320 Speaker 3: versus what are the needs that we're trying to solve 612 00:29:37,360 --> 00:29:40,640 Speaker 3: for and how do we make pensioneer's life better? And 613 00:29:40,760 --> 00:29:42,880 Speaker 3: I think by having I know, I keep saying it, 614 00:29:42,960 --> 00:29:46,560 Speaker 3: but this retirement services mindset, it allows us to do that. 615 00:29:46,600 --> 00:29:46,920 Speaker 2: First. 616 00:29:47,320 --> 00:29:50,840 Speaker 3: Mark's also been pretty vocal about how, you know, the 617 00:29:50,880 --> 00:29:55,040 Speaker 3: retirement business, the retirement industry for the US in general, 618 00:29:55,240 --> 00:29:57,720 Speaker 3: is something that needs to be you know, shaken up 619 00:29:57,720 --> 00:29:59,080 Speaker 3: a bit, right when you think about the four to 620 00:29:59,120 --> 00:30:01,360 Speaker 3: one k's that all of us have and the fact 621 00:30:01,400 --> 00:30:03,720 Speaker 3: that you can't get also in those businesses or in 622 00:30:03,760 --> 00:30:06,360 Speaker 3: those portfolios. That is an area that we think is 623 00:30:06,360 --> 00:30:09,320 Speaker 3: another is another room to grow. So I think for us, 624 00:30:09,360 --> 00:30:11,360 Speaker 3: it's about just making sure that we understand the state 625 00:30:11,400 --> 00:30:15,160 Speaker 3: of play, but aren't staying static and are thinking ahead 626 00:30:15,320 --> 00:30:18,240 Speaker 3: in terms of how to incorporate what we know in 627 00:30:18,320 --> 00:30:19,720 Speaker 3: broad based way and. 628 00:30:19,720 --> 00:30:21,400 Speaker 1: How do the regulators come into that. 629 00:30:21,800 --> 00:30:22,440 Speaker 2: It's a great point. 630 00:30:22,480 --> 00:30:24,040 Speaker 3: So I think that you know, one of the things 631 00:30:24,040 --> 00:30:27,640 Speaker 3: that people always say is, you know, we aren't necessarily 632 00:30:27,640 --> 00:30:29,320 Speaker 3: regulated like a bank, which is true, but we are 633 00:30:29,360 --> 00:30:31,760 Speaker 3: regulated like an insurance company which has its. 634 00:30:31,560 --> 00:30:33,920 Speaker 2: Own federal state number. 635 00:30:33,960 --> 00:30:36,200 Speaker 3: We have, we publish all of our positions, We have 636 00:30:36,240 --> 00:30:39,800 Speaker 3: to be hyper transparent. It is an incredibly regulatory, regulatory 637 00:30:39,880 --> 00:30:43,680 Speaker 3: driven environment and business to be in, and so we 638 00:30:43,720 --> 00:30:46,160 Speaker 3: spend a lot of time with the regulators and we 639 00:30:46,720 --> 00:30:48,400 Speaker 3: want to continue to make sure that we are being 640 00:30:48,400 --> 00:30:51,240 Speaker 3: transparent and operating invest in class. And so you know, 641 00:30:51,240 --> 00:30:54,440 Speaker 3: whether it's the new administration or you know, other areas 642 00:30:54,440 --> 00:30:56,920 Speaker 3: of government, I think that you'll find that we will 643 00:30:56,920 --> 00:31:00,160 Speaker 3: try to be constructive to get to the best outcome and. 644 00:31:00,200 --> 00:31:03,720 Speaker 4: Pensioners and retirees like I am one of those retirees 645 00:31:03,720 --> 00:31:05,480 Speaker 4: who has is part of that seven and a half 646 00:31:05,520 --> 00:31:08,840 Speaker 4: trillion dollar four oh one KPI. So is this is 647 00:31:08,880 --> 00:31:12,040 Speaker 4: this an opportunity that only guys like Apollo can can 648 00:31:12,080 --> 00:31:14,120 Speaker 4: take place in or is this something that I can 649 00:31:14,200 --> 00:31:19,120 Speaker 4: participate via ETF or some other mechanism, because these kind 650 00:31:19,160 --> 00:31:21,880 Speaker 4: of returns with you know, single a tier credit quality 651 00:31:21,960 --> 00:31:23,960 Speaker 4: is pretty impressive. No. 652 00:31:24,120 --> 00:31:27,560 Speaker 3: I think that our goal, again speaking you know, high level, 653 00:31:27,680 --> 00:31:31,760 Speaker 3: is that you me, everyone can benefit from, you know, 654 00:31:31,920 --> 00:31:35,000 Speaker 3: utilizing private assets in your portfolio, whether it's a four 655 00:31:35,000 --> 00:31:35,280 Speaker 3: to one. 656 00:31:35,280 --> 00:31:36,080 Speaker 2: K or otherwise. 657 00:31:36,600 --> 00:31:39,920 Speaker 3: And you know, we are really working with a number 658 00:31:39,920 --> 00:31:43,120 Speaker 3: of different partners to figure out how to introduce you know, 659 00:31:43,280 --> 00:31:46,640 Speaker 3: our assets, our business, et cetera in ways that can 660 00:31:46,680 --> 00:31:50,000 Speaker 3: be consumed via these markets that have historically been very 661 00:31:50,000 --> 00:31:52,680 Speaker 3: ETF and mutual fund heavy. You know, we you know, 662 00:31:52,720 --> 00:31:56,040 Speaker 3: we're just added to the SMP a week ago, which 663 00:31:56,120 --> 00:31:59,200 Speaker 3: was a huge milestone for us. It shows the institutionalization 664 00:31:59,200 --> 00:32:01,280 Speaker 3: of our business, our strategy. It was a great testament. 665 00:32:01,560 --> 00:32:04,000 Speaker 3: But also it allows, you know, if you believe, in 666 00:32:04,000 --> 00:32:07,520 Speaker 3: some way, broader investors to get access to private markets 667 00:32:07,600 --> 00:32:10,440 Speaker 3: via our company. And so whether that's through you know, 668 00:32:10,560 --> 00:32:13,520 Speaker 3: just the broad based exposure through the SMP, or for 669 00:32:13,640 --> 00:32:15,640 Speaker 3: us to be able to get more included and provide 670 00:32:15,640 --> 00:32:18,800 Speaker 3: assets within ETF and mutual funds over time that should 671 00:32:18,840 --> 00:32:19,640 Speaker 3: benefit everybody. 672 00:32:20,160 --> 00:32:21,560 Speaker 1: But if I look at the S and P, I mean, 673 00:32:21,600 --> 00:32:24,360 Speaker 1: I just keep making twenty percent every year by doing nothing, 674 00:32:24,400 --> 00:32:26,960 Speaker 1: and if it all goes wrong, the Fed's going to 675 00:32:26,960 --> 00:32:29,240 Speaker 1: come in and help. Why should I get into something 676 00:32:29,280 --> 00:32:32,240 Speaker 1: really esoteric that I don't understand and it's all you know, 677 00:32:32,280 --> 00:32:35,120 Speaker 1: there's no transparency and it's you know, it's just weird stuff. 678 00:32:35,120 --> 00:32:37,720 Speaker 1: Why would I do that and not just you know, 679 00:32:38,360 --> 00:32:39,080 Speaker 1: the easiest thing. 680 00:32:40,040 --> 00:32:42,040 Speaker 3: It's it's hard to argue with when when you put 681 00:32:42,040 --> 00:32:44,520 Speaker 3: it that way, I think that like anything right, it's 682 00:32:44,560 --> 00:32:47,560 Speaker 3: it's about diversification. And so certainly the S and P 683 00:32:47,720 --> 00:32:50,640 Speaker 3: has just been completely a really strong asset to be in. 684 00:32:50,800 --> 00:32:53,080 Speaker 3: And to your point, I think that the new administration 685 00:32:53,160 --> 00:32:55,960 Speaker 3: is definitely going to be focused on supporting that, and 686 00:32:56,080 --> 00:32:57,880 Speaker 3: to your point, the FED will also be focused on 687 00:32:57,920 --> 00:33:00,840 Speaker 3: supporting it. So it's it's a great puct and continues 688 00:33:00,840 --> 00:33:03,880 Speaker 3: to have perform. But just generally speaking, having some diversification 689 00:33:03,880 --> 00:33:05,600 Speaker 3: in your portfolio is probably prudent. 690 00:33:06,600 --> 00:33:09,040 Speaker 1: On the fundraising side. I'm interested in also how you 691 00:33:09,080 --> 00:33:11,280 Speaker 1: compete there because you know, there's places like for example, 692 00:33:11,280 --> 00:33:13,080 Speaker 1: the Middle East where there's you know, tons of interest, 693 00:33:13,120 --> 00:33:15,840 Speaker 1: there's tons of capital, but also loads of competition. I mean, 694 00:33:15,920 --> 00:33:18,200 Speaker 1: is there something that you do, particularly on the fundraising 695 00:33:18,200 --> 00:33:19,800 Speaker 1: side that gets you more mandates. 696 00:33:20,600 --> 00:33:20,840 Speaker 4: Yeah. 697 00:33:20,840 --> 00:33:23,840 Speaker 3: I think that we We've been very fortunate in terms 698 00:33:23,840 --> 00:33:26,880 Speaker 3: of our ability to raise capital globally. I think that 699 00:33:27,560 --> 00:33:30,120 Speaker 3: investors are getting you know, on the institutional side and 700 00:33:30,160 --> 00:33:33,680 Speaker 3: also candidly on the weld side, but also talk institutional first, 701 00:33:34,160 --> 00:33:36,760 Speaker 3: are really you know, getting more and more sophisticated. Obviously, 702 00:33:36,800 --> 00:33:40,160 Speaker 3: they're looking for broader partnerships, They're looking for creative ways. Right, 703 00:33:40,200 --> 00:33:44,000 Speaker 3: It's not only about having XYZ fund that you can 704 00:33:44,120 --> 00:33:46,760 Speaker 3: kind of invest in. It's that plus having a broader 705 00:33:46,760 --> 00:33:51,640 Speaker 3: partnership approach providing additional access. It's about you know, you've 706 00:33:51,640 --> 00:33:54,080 Speaker 3: seen in the press. We've worked with many large Middle 707 00:33:54,080 --> 00:33:57,160 Speaker 3: Eastern sovereign wealth funds to help stand up businesses and 708 00:33:57,200 --> 00:33:59,880 Speaker 3: provide us working capital in partnership with RIGHT and so 709 00:34:00,400 --> 00:34:03,080 Speaker 3: being able to have that relationship and not just be 710 00:34:03,160 --> 00:34:06,640 Speaker 3: so linear has been I think a big attribute to us. 711 00:34:06,720 --> 00:34:08,879 Speaker 3: And then our growth on the well side has been 712 00:34:08,920 --> 00:34:11,560 Speaker 3: I think tremendous. Some of our peers have done an 713 00:34:11,600 --> 00:34:15,320 Speaker 3: amazing job in wealth, but we have really spent a 714 00:34:15,360 --> 00:34:19,160 Speaker 3: lot of time and effort bringing the alts business alongside 715 00:34:19,160 --> 00:34:21,280 Speaker 3: our peers to the well channel, and it's still incredibly 716 00:34:21,360 --> 00:34:24,680 Speaker 3: underpenetrated when you think about the underlying constituents, and so 717 00:34:24,960 --> 00:34:28,080 Speaker 3: I think being creative. You know, you talked about complexity 718 00:34:28,160 --> 00:34:30,120 Speaker 3: right in terms of why would I be why would 719 00:34:30,120 --> 00:34:31,200 Speaker 3: I go down the complex route? 720 00:34:31,480 --> 00:34:32,520 Speaker 2: But when you think about you. 721 00:34:32,520 --> 00:34:36,320 Speaker 3: Know, BDCs and very basic access points for investors in 722 00:34:36,400 --> 00:34:38,799 Speaker 3: private credit, you know what's the next leg of that? 723 00:34:39,120 --> 00:34:41,520 Speaker 3: How do you get asset based finance in that structure? 724 00:34:41,560 --> 00:34:43,200 Speaker 3: So we're working through a lot of these things that 725 00:34:43,239 --> 00:34:46,000 Speaker 3: we think will ultimately be beneficial for wealth as well. 726 00:34:47,000 --> 00:34:51,279 Speaker 1: You mentioned BDC's they are getting more pick interests, they 727 00:34:51,320 --> 00:34:54,200 Speaker 1: are you know, some of them are struggling. We are 728 00:34:54,280 --> 00:34:56,880 Speaker 1: hearing more mends, more extends, all that stuff. So you know, 729 00:34:57,040 --> 00:35:00,759 Speaker 1: this asset class is not without risk. What are you 730 00:35:00,800 --> 00:35:04,080 Speaker 1: saying right now that kind of worries you in tons 731 00:35:04,080 --> 00:35:05,080 Speaker 1: of the private markets. 732 00:35:05,920 --> 00:35:09,280 Speaker 3: I think that all the things you mentioned, they are worrisome. 733 00:35:09,320 --> 00:35:11,000 Speaker 3: I think we if you look at our you know, 734 00:35:11,040 --> 00:35:13,640 Speaker 3: non traded BBC, we're very proud of the stats as 735 00:35:13,640 --> 00:35:16,640 Speaker 3: it relates to our peers in terms of pick and 736 00:35:15,400 --> 00:35:20,760 Speaker 3: other metrics. But that being said, it's an industry wide issue, 737 00:35:21,040 --> 00:35:24,360 Speaker 3: and you know, if an investor or several investors or 738 00:35:24,440 --> 00:35:27,240 Speaker 3: hundreds of investors have a bad experience, that will influence 739 00:35:27,280 --> 00:35:30,680 Speaker 3: the broader, broader market. I also think that, you know, 740 00:35:31,000 --> 00:35:34,520 Speaker 3: the gating mechanisms can be viewed in a positive or 741 00:35:34,520 --> 00:35:37,719 Speaker 3: negative light. Sometimes investors don't like to be gated, which 742 00:35:37,719 --> 00:35:40,680 Speaker 3: makes sense, but equally that protects their interests over time 743 00:35:40,719 --> 00:35:43,560 Speaker 3: and hopefully mutes volatility, you know, in terms of their experience. 744 00:35:43,600 --> 00:35:46,840 Speaker 3: And so I think that just making sure that we 745 00:35:47,000 --> 00:35:50,520 Speaker 3: as an industry are really focused on making sure that 746 00:35:50,600 --> 00:35:54,040 Speaker 3: the bar for what we're investing in is high, muting 747 00:35:54,120 --> 00:35:57,920 Speaker 3: volatility for end investors, and really trying to ensure that 748 00:35:58,400 --> 00:36:01,279 Speaker 3: we're not going down the path of any or a 749 00:36:01,280 --> 00:36:03,960 Speaker 3: bunch of lemy that's going to create more noise in 750 00:36:04,040 --> 00:36:06,200 Speaker 3: a structure that's supposed to be first, lean and safe 751 00:36:06,280 --> 00:36:08,920 Speaker 3: risk is really all that we can kind of ask for. 752 00:36:09,320 --> 00:36:12,040 Speaker 1: I'm sure you're doing it, but there's so much cash 753 00:36:12,040 --> 00:36:14,920 Speaker 1: coming in in all markets, and there aren't enough deals, 754 00:36:15,000 --> 00:36:18,600 Speaker 1: and you know, there is therefore room for error you know, 755 00:36:18,640 --> 00:36:21,200 Speaker 1: we've had people on this show talk about how it's 756 00:36:21,280 --> 00:36:23,000 Speaker 1: not them that's going to do the bad deals. It's 757 00:36:23,000 --> 00:36:25,640 Speaker 1: the tourists, you know, it's other people that will you know, 758 00:36:25,719 --> 00:36:28,719 Speaker 1: mess up potentially. Do you see any signs of fraus 759 00:36:28,840 --> 00:36:30,799 Speaker 1: in this market, any signs that you know that some 760 00:36:30,840 --> 00:36:33,000 Speaker 1: deals are getting done that maybe shouldn't get done. 761 00:36:33,760 --> 00:36:35,640 Speaker 2: Absolutely. I mean, I think that we've been seeing this. 762 00:36:35,800 --> 00:36:37,960 Speaker 3: It's funny because I'm sure you've been having this conversation 763 00:36:38,040 --> 00:36:40,360 Speaker 3: for a long time, and every time you think that 764 00:36:40,440 --> 00:36:43,080 Speaker 3: the private markets are at their tippy top, they're just 765 00:36:43,239 --> 00:36:46,719 Speaker 3: fire and higher and higher. And so there's certainly we 766 00:36:46,760 --> 00:36:50,680 Speaker 3: are passing on a lot of transactions. We are really 767 00:36:50,719 --> 00:36:54,440 Speaker 3: trying to be thoughtful. I think our business is unique 768 00:36:54,440 --> 00:36:57,560 Speaker 3: in terms of obviously we need to maintain the expectations. 769 00:36:57,040 --> 00:36:58,520 Speaker 2: Of our investors in terms of deployment. 770 00:36:59,040 --> 00:37:02,160 Speaker 3: And it's a push because investors come to us and say, 771 00:37:02,239 --> 00:37:05,319 Speaker 3: we credit spreads are tight, but yields are high, and 772 00:37:05,320 --> 00:37:07,200 Speaker 3: we want to be invested and we want to cash 773 00:37:07,239 --> 00:37:08,600 Speaker 3: hield and we want to make sure that we're in 774 00:37:08,640 --> 00:37:11,440 Speaker 3: the ground now married with what don't mess it up, 775 00:37:11,440 --> 00:37:12,640 Speaker 3: don't do something that we don't want to do, and 776 00:37:12,640 --> 00:37:13,920 Speaker 3: we want to make sure that you're still sticking to 777 00:37:13,920 --> 00:37:15,960 Speaker 3: your knitting in terms of the risk reward that you're taking. 778 00:37:15,960 --> 00:37:18,719 Speaker 3: And so we try to really be very prudent in 779 00:37:18,760 --> 00:37:23,520 Speaker 3: our deployment and ensure that we are being actively transparent 780 00:37:23,520 --> 00:37:26,200 Speaker 3: with investors in terms of pacing. But certainly there are 781 00:37:26,239 --> 00:37:28,200 Speaker 3: deals that are being done that we are passing on. 782 00:37:28,280 --> 00:37:30,759 Speaker 3: There are deals that are in our sub investment grade 783 00:37:30,800 --> 00:37:33,640 Speaker 3: business where there is a lot of you know, we've 784 00:37:33,640 --> 00:37:35,600 Speaker 3: talked about credit or and creditor violence, there's a lot 785 00:37:35,640 --> 00:37:38,279 Speaker 3: of lme when we engage in that, we try to 786 00:37:38,320 --> 00:37:40,239 Speaker 3: make sure that we're bringing the majority of the debt 787 00:37:40,239 --> 00:37:42,120 Speaker 3: stack along with us so that we're not going to 788 00:37:42,160 --> 00:37:46,960 Speaker 3: have future you know, debate and litigation. So it's about 789 00:37:47,000 --> 00:37:48,440 Speaker 3: just making sure that you pick your spots. 790 00:37:48,640 --> 00:37:50,560 Speaker 1: Do you expect that to get worse though, as we 791 00:37:50,680 --> 00:37:54,360 Speaker 1: you know, have more inflow and potentially less net supply 792 00:37:54,400 --> 00:37:56,239 Speaker 1: across the board and fixed income and that's certainly what 793 00:37:56,280 --> 00:37:59,160 Speaker 1: we're seeing. Is twenty twenty five going to be a 794 00:37:59,200 --> 00:38:01,640 Speaker 1: year of you know, risky deals getting done. 795 00:38:02,600 --> 00:38:04,440 Speaker 3: I think twenty twenty five will be a year of 796 00:38:04,880 --> 00:38:08,480 Speaker 3: higher rates, likely a strong economy, likely some buoyancy when 797 00:38:08,520 --> 00:38:11,759 Speaker 3: it comes to M and A deals. Probably some kind 798 00:38:11,840 --> 00:38:14,680 Speaker 3: of disparate treatment in sectors, particularly if you think about 799 00:38:14,719 --> 00:38:17,200 Speaker 3: the tear of certain things like that that might impact 800 00:38:17,200 --> 00:38:23,800 Speaker 3: certain geographies in certain sectors, and likely a continued bid 801 00:38:23,840 --> 00:38:26,960 Speaker 3: for private assets will which will create deals that are 802 00:38:27,000 --> 00:38:29,800 Speaker 3: done that probably shouldn't get done. You know, the triple 803 00:38:29,800 --> 00:38:33,279 Speaker 3: C part of the market is you know, yielding significantly 804 00:38:33,360 --> 00:38:36,440 Speaker 3: higher by design, right, because they are riskier types of transactions, 805 00:38:36,800 --> 00:38:40,560 Speaker 3: and so from our perspective, we just think that staying 806 00:38:40,640 --> 00:38:43,440 Speaker 3: top of the capital structure first, lean in really high 807 00:38:43,560 --> 00:38:46,640 Speaker 3: quality credits is where you are probably safest, and we 808 00:38:46,680 --> 00:38:48,839 Speaker 3: try to avoid some of those other transactions. 809 00:38:49,200 --> 00:38:51,560 Speaker 1: Are there any sectors that you think of particularly risky 810 00:38:51,600 --> 00:38:53,840 Speaker 1: at the moment in terms of the US economy. 811 00:38:54,160 --> 00:38:56,040 Speaker 3: I think that, you know, the most obvious one is 812 00:38:56,120 --> 00:38:58,719 Speaker 3: kind of autos, right, I think just given some of 813 00:38:58,760 --> 00:39:02,120 Speaker 3: the protectionist tariffs that might in particularly with Canada and Mexico, 814 00:39:03,080 --> 00:39:05,560 Speaker 3: we're a little bit bearished at now on the electric side. 815 00:39:05,560 --> 00:39:07,920 Speaker 3: Hopefully that will be you know, offset in some degree. 816 00:39:08,920 --> 00:39:12,640 Speaker 3: We are bearish like most people in terms of office 817 00:39:12,640 --> 00:39:15,480 Speaker 3: within CRE and what that means for retail and the like. 818 00:39:16,680 --> 00:39:19,840 Speaker 3: But generally speaking, pretty constructive overall. 819 00:39:20,760 --> 00:39:24,080 Speaker 1: I'm interested in also your global view because everybody's loaded 820 00:39:24,160 --> 00:39:27,400 Speaker 1: up on US assets. Global is in your titles, so 821 00:39:27,920 --> 00:39:31,120 Speaker 1: hopefully we can draw you to other countries. But you 822 00:39:31,120 --> 00:39:33,560 Speaker 1: know what else is out there in terms of opportunity 823 00:39:33,680 --> 00:39:35,840 Speaker 1: for Apollo not US. 824 00:39:36,320 --> 00:39:40,239 Speaker 3: I think that we are obviously very Our business is 825 00:39:40,320 --> 00:39:42,880 Speaker 3: very much focused on developed markets, so the US is 826 00:39:42,880 --> 00:39:45,720 Speaker 3: obviously the biggest part of that. Developed Europe is another 827 00:39:45,719 --> 00:39:48,520 Speaker 3: big part. You know, we have north of four hundred 828 00:39:48,520 --> 00:39:50,520 Speaker 3: people in Ourope in our London office, so we are 829 00:39:50,600 --> 00:39:54,719 Speaker 3: really building our European capabilities across both direct lending in 830 00:39:54,760 --> 00:39:58,320 Speaker 3: the subinvestment grade market as well as in asset base finance. 831 00:39:58,480 --> 00:40:00,480 Speaker 3: It's a little bit more challenging right now asset base 832 00:40:00,480 --> 00:40:02,680 Speaker 3: financial just because, as you may know, there's a lot 833 00:40:02,680 --> 00:40:05,359 Speaker 3: of EU securitization risk retention laws that we were trying 834 00:40:05,360 --> 00:40:07,919 Speaker 3: to contend with. But equally, we think that there will 835 00:40:07,960 --> 00:40:13,560 Speaker 3: be opportunities to really construct portfolios that meet the criteria 836 00:40:13,719 --> 00:40:17,080 Speaker 3: of those regulations in a way that really hasn't been 837 00:40:17,200 --> 00:40:18,960 Speaker 3: done or at least in the scale that we hope 838 00:40:19,000 --> 00:40:21,960 Speaker 3: to do. And then you know, we're constructive on cire 839 00:40:22,480 --> 00:40:23,840 Speaker 3: X some of the things that we talked about. 840 00:40:24,000 --> 00:40:24,839 Speaker 2: In Europe as well. 841 00:40:25,000 --> 00:40:27,120 Speaker 3: Asia, we have a very large business as well, but 842 00:40:27,320 --> 00:40:30,319 Speaker 3: it is much more idiosyncratic in terms of the opportunities 843 00:40:30,320 --> 00:40:33,560 Speaker 3: that we tend to pursue. But we have a large 844 00:40:33,560 --> 00:40:36,080 Speaker 3: business out of our equity as well as our hybrid 845 00:40:36,120 --> 00:40:38,839 Speaker 3: equity businesses, so prefs and converts and things like that, 846 00:40:39,760 --> 00:40:42,040 Speaker 3: and then we pick our spots very specifically when it 847 00:40:42,080 --> 00:40:46,160 Speaker 3: comes to EM oriented opportunities. So it's a smaller part 848 00:40:46,160 --> 00:40:48,319 Speaker 3: of our business, but something that will probably grow over time. 849 00:40:48,480 --> 00:40:50,760 Speaker 1: In Europe, is there any particular country focus. 850 00:40:51,640 --> 00:40:54,960 Speaker 3: We do a lot in the UK for obvious reasons, 851 00:40:55,000 --> 00:40:57,200 Speaker 3: given our focus on kind of you know, safer yield 852 00:40:57,719 --> 00:41:00,880 Speaker 3: and mostly the UK, which is where we're spending a 853 00:41:00,880 --> 00:41:03,560 Speaker 3: lot of our time on cire and asset based finance. 854 00:41:04,200 --> 00:41:05,600 Speaker 2: We will do some opportunities. 855 00:41:05,600 --> 00:41:09,200 Speaker 3: For example, we've done some sports financing and media rights 856 00:41:09,239 --> 00:41:13,160 Speaker 3: from Portugal and Spain, which are more idiosyncratic, specific to 857 00:41:13,400 --> 00:41:17,280 Speaker 3: those circumstances where you're able to get long term contracted 858 00:41:17,320 --> 00:41:20,480 Speaker 3: cash flows based on meteor rights that have been agreed 859 00:41:20,480 --> 00:41:23,359 Speaker 3: to with you know, one or two parties. And then 860 00:41:23,360 --> 00:41:25,279 Speaker 3: we've done a couple of deals in France. 861 00:41:25,040 --> 00:41:27,400 Speaker 1: And the like, and in Asia, any particular countries that 862 00:41:27,440 --> 00:41:29,480 Speaker 1: you tend to be more focused on. 863 00:41:29,400 --> 00:41:32,440 Speaker 3: Where we've spent more time is what I call it 864 00:41:32,560 --> 00:41:35,360 Speaker 3: a pac generally speaking. So we've done a number of 865 00:41:35,400 --> 00:41:37,719 Speaker 3: deals in Australia and New Zealand, which obviously are much 866 00:41:37,719 --> 00:41:41,160 Speaker 3: more developed. We've done a couple transactions and I'm talking 867 00:41:41,160 --> 00:41:44,120 Speaker 3: credit you know, less so on the equity side in India, 868 00:41:45,000 --> 00:41:48,759 Speaker 3: but likely more of the you know, established markets is 869 00:41:48,760 --> 00:41:49,400 Speaker 3: where we tend. 870 00:41:49,280 --> 00:41:52,440 Speaker 1: To focus interested instead of circling back to where we started. 871 00:41:52,480 --> 00:41:57,480 Speaker 1: This forty trillion number which constantly intrigues me. How soon 872 00:41:57,560 --> 00:41:58,080 Speaker 1: do we get there? 873 00:41:58,200 --> 00:41:59,560 Speaker 2: I think we're going to get there really soon. 874 00:42:00,080 --> 00:42:03,080 Speaker 3: Do I think that, you know, a lot of market 875 00:42:03,160 --> 00:42:06,160 Speaker 3: participants are starting to privatize. 876 00:42:06,960 --> 00:42:09,120 Speaker 2: The asset based market. We're not alone in that, So 877 00:42:09,120 --> 00:42:10,040 Speaker 2: I think you're going to see. 878 00:42:09,920 --> 00:42:14,400 Speaker 3: A lot more private credit offerings and strategies focused on 879 00:42:14,520 --> 00:42:17,600 Speaker 3: asset based and then you know, the investment grade part 880 00:42:17,640 --> 00:42:19,960 Speaker 3: I think will continue to you know, we'll work with 881 00:42:20,080 --> 00:42:22,720 Speaker 3: large companies and start to privatize more of their balances 882 00:42:22,719 --> 00:42:23,080 Speaker 3: over time. 883 00:42:23,120 --> 00:42:24,600 Speaker 2: So I think I think we will get there soon. 884 00:42:24,840 --> 00:42:26,520 Speaker 1: But what is it now in terms of just asset 885 00:42:26,560 --> 00:42:27,799 Speaker 1: based we. 886 00:42:27,920 --> 00:42:29,720 Speaker 2: Estimated it's like twenty twenty trillion dollar. 887 00:42:29,640 --> 00:42:32,960 Speaker 1: Market already, yeah, and could be forty when you say 888 00:42:33,040 --> 00:42:35,440 Speaker 1: very soon. Obviously, journalists we always look for numbers when 889 00:42:35,560 --> 00:42:39,480 Speaker 1: what give us a year, Come on, give me exact year. 890 00:42:40,520 --> 00:42:42,440 Speaker 2: But I would I would, I was inspect within the 891 00:42:42,480 --> 00:42:43,200 Speaker 2: next five years you. 892 00:42:43,200 --> 00:42:46,319 Speaker 1: Can okay, interesting, okay, And then in returns, I mean 893 00:42:46,440 --> 00:42:49,799 Speaker 1: you talked about how you know, the competition there will 894 00:42:49,840 --> 00:42:54,279 Speaker 1: be compression, convergence, all that stuff, but presumably if you 895 00:42:54,320 --> 00:42:57,000 Speaker 1: don't continue to offer excess, then you're not going to 896 00:42:57,239 --> 00:43:01,040 Speaker 1: grow at that rate. So you know, next next year returns. 897 00:43:01,239 --> 00:43:03,520 Speaker 1: Have you got any kind of number you could put 898 00:43:03,600 --> 00:43:03,759 Speaker 1: on that? 899 00:43:05,000 --> 00:43:07,320 Speaker 3: James, you're really putting me out here in terms of returns, 900 00:43:07,440 --> 00:43:10,440 Speaker 3: I think that, you know, we we still think that 901 00:43:10,600 --> 00:43:13,439 Speaker 3: you can get you know, a couple hundred basis points 902 00:43:13,480 --> 00:43:16,600 Speaker 3: of access spread compared to the relevant benchmark across the 903 00:43:16,640 --> 00:43:18,319 Speaker 3: board if you kind of. 904 00:43:18,440 --> 00:43:21,239 Speaker 2: Are, okay, taking a more private and illiquidity risk and. 905 00:43:21,280 --> 00:43:23,560 Speaker 1: That's a next year, that's a next year cool, okay, 906 00:43:24,000 --> 00:43:25,479 Speaker 1: And then if you just had to put your finger 907 00:43:25,520 --> 00:43:28,480 Speaker 1: on one opportunity, I mean I do this every time, 908 00:43:28,520 --> 00:43:30,800 Speaker 1: and I know it's pity hard when you're a global person. 909 00:43:30,920 --> 00:43:33,920 Speaker 1: But single best credit market opportunity in terms of relative 910 00:43:34,000 --> 00:43:36,640 Speaker 1: value for next year, we. 911 00:43:36,800 --> 00:43:40,560 Speaker 3: Actually think that they opportunity in there's it's hard to 912 00:43:40,600 --> 00:43:42,160 Speaker 3: say because we actually think there's a lot, but we 913 00:43:42,239 --> 00:43:45,400 Speaker 3: think commercial real estate is actually very very interesting in 914 00:43:45,600 --> 00:43:46,920 Speaker 3: terms of you. 915 00:43:46,960 --> 00:43:48,000 Speaker 2: Know, where we are. 916 00:43:48,120 --> 00:43:50,040 Speaker 3: There's been a lot of dry powder in the real 917 00:43:50,160 --> 00:43:53,759 Speaker 3: estate equity business and we saw you know, a twenty 918 00:43:53,800 --> 00:43:56,719 Speaker 3: to thirty percent repricing generally speaking, because people were very 919 00:43:56,760 --> 00:43:59,400 Speaker 3: bearish commercial and we didn't see the distress come through 920 00:43:59,440 --> 00:44:02,320 Speaker 3: outside of our and so that's an area where you 921 00:44:02,400 --> 00:44:05,759 Speaker 3: can really lean in and still get really interesting opportunities 922 00:44:05,840 --> 00:44:09,320 Speaker 3: if you're selective and if you're focusing on really interesting areas. 923 00:44:09,400 --> 00:44:10,160 Speaker 2: And depending on. 924 00:44:10,200 --> 00:44:13,040 Speaker 3: How you define commercial real estate, that can also include 925 00:44:13,080 --> 00:44:14,440 Speaker 3: financing of data centers in the like. 926 00:44:14,480 --> 00:44:16,040 Speaker 2: So that's an area that we think is really interesting. 927 00:44:16,280 --> 00:44:18,360 Speaker 1: Is that in the US, in the US, any particular 928 00:44:18,920 --> 00:44:20,880 Speaker 1: place in the US, any regional So. 929 00:44:20,960 --> 00:44:22,680 Speaker 2: I think for US, we spent time well. 930 00:44:22,680 --> 00:44:25,560 Speaker 3: I think travel has held up a lot better and 931 00:44:25,680 --> 00:44:29,680 Speaker 3: people expected and so we've worked with some of the 932 00:44:29,800 --> 00:44:35,080 Speaker 3: large hospitality programs across the US. Residential, you know, commercial, 933 00:44:35,160 --> 00:44:38,960 Speaker 3: but like for you know, broader areas within Florida have 934 00:44:39,040 --> 00:44:40,839 Speaker 3: been interesting just given the migration there. 935 00:44:41,320 --> 00:44:42,760 Speaker 2: And then when you think about data. 936 00:44:42,560 --> 00:44:45,160 Speaker 3: Centers and the like, you know, areas which have really 937 00:44:45,200 --> 00:44:48,520 Speaker 3: strong connections to the power grid, whether that's northern Virginia, 938 00:44:48,920 --> 00:44:54,080 Speaker 3: the texasssays, and certain areas North Carolina where we are 939 00:44:54,120 --> 00:44:55,600 Speaker 3: focused in terms of that area. 940 00:44:56,280 --> 00:44:59,120 Speaker 1: You know, I'm a warrior. So what keeps you up 941 00:44:59,200 --> 00:45:01,880 Speaker 1: at night worrying about? You know, the market? I mean, 942 00:45:01,920 --> 00:45:05,440 Speaker 1: I generally people are very very bullish for next year. 943 00:45:05,880 --> 00:45:07,680 Speaker 1: The conference that that I was talking about, everyone was 944 00:45:07,840 --> 00:45:11,480 Speaker 1: very very excited about credit for twenty twenty five. And 945 00:45:11,600 --> 00:45:13,440 Speaker 1: yet you've got, you know, all the stuff going on 946 00:45:13,560 --> 00:45:15,360 Speaker 1: that I mentioned at the start. You've got you know, 947 00:45:15,400 --> 00:45:18,120 Speaker 1: potentially the FED has to pivot. That's what people would 948 00:45:18,120 --> 00:45:21,120 Speaker 1: be very concerned about. Then there's too much demand and 949 00:45:21,160 --> 00:45:23,360 Speaker 1: not enough supply. So those are things that worried me. 950 00:45:23,440 --> 00:45:23,840 Speaker 4: What about you? 951 00:45:24,920 --> 00:45:25,520 Speaker 2: I think you're right. 952 00:45:25,560 --> 00:45:28,840 Speaker 3: I think if the FED pivots, that could be you know, 953 00:45:29,239 --> 00:45:32,560 Speaker 3: a big that would likely be difficult for the market 954 00:45:32,600 --> 00:45:35,880 Speaker 3: to digest. I think that, you know, for credit investors, 955 00:45:36,080 --> 00:45:38,880 Speaker 3: you know, higher for longer within reason is a great thing. 956 00:45:40,040 --> 00:45:42,239 Speaker 3: If that were to kind of completely reverse, you know, 957 00:45:42,280 --> 00:45:46,239 Speaker 3: we'd have to figure out other ways to attract and 958 00:45:46,760 --> 00:45:50,640 Speaker 3: return the returns that I mentioned. I think that, you know, 959 00:45:50,719 --> 00:45:54,560 Speaker 3: we're not without geopolitical risk, although it seems like the 960 00:45:54,640 --> 00:45:57,719 Speaker 3: market seems to digest that pretty easily for better or 961 00:45:57,760 --> 00:46:01,000 Speaker 3: for worse, and so you know, it's I think it'll 962 00:46:01,040 --> 00:46:03,560 Speaker 3: be more Our view is it'll be more sector specific 963 00:46:03,680 --> 00:46:08,279 Speaker 3: dispersion next year versus kind of broad based market volatility, 964 00:46:08,320 --> 00:46:10,160 Speaker 3: because to your point, it does seem like the economies 965 00:46:10,160 --> 00:46:11,799 Speaker 3: in a decent place. It does seem like the fet 966 00:46:11,880 --> 00:46:14,040 Speaker 3: is pretty much going to stay on course. You know, 967 00:46:14,160 --> 00:46:16,960 Speaker 3: inflation will have to kind of be monitored and ensure 968 00:46:17,000 --> 00:46:20,640 Speaker 3: that we kind of don't overextend ourselves. But whether that's 969 00:46:20,760 --> 00:46:23,080 Speaker 3: kind of the tariffs that I mentioned, whether that's cuts 970 00:46:23,120 --> 00:46:26,160 Speaker 3: from DOGE that are potentially forthcoming, who knows what will 971 00:46:26,200 --> 00:46:28,960 Speaker 3: happen there, as well as kind of m and a. 972 00:46:29,120 --> 00:46:30,600 Speaker 2: With an m and a, there's winners of losers. 973 00:46:30,640 --> 00:46:33,400 Speaker 1: To our last guests was very worried about group thing. 974 00:46:33,560 --> 00:46:35,880 Speaker 1: Is there anything you think you're absolutely contrarian on right 975 00:46:35,960 --> 00:46:38,120 Speaker 1: now that you're doing that other people have got wrong? 976 00:46:39,239 --> 00:46:40,839 Speaker 3: I don't know, if it's like we think that we're 977 00:46:40,880 --> 00:46:42,800 Speaker 3: doing the others have gotten wrong. I think that we 978 00:46:43,040 --> 00:46:45,640 Speaker 3: have very deliberately positioned our business and I don't mean 979 00:46:45,680 --> 00:46:49,040 Speaker 3: to sound like a broken record on the higher quality 980 00:46:49,239 --> 00:46:51,520 Speaker 3: end of the spectrum. And I think that many of 981 00:46:51,560 --> 00:46:53,600 Speaker 3: our peers have built their businesses rightfully so and very 982 00:46:53,640 --> 00:46:56,840 Speaker 3: successfully slow on the other side, and so that I 983 00:46:56,880 --> 00:46:59,000 Speaker 3: think is a big differentiator for us and will win 984 00:46:59,040 --> 00:47:01,600 Speaker 3: out when there is volatile and when investors do you 985 00:47:01,680 --> 00:47:03,560 Speaker 3: try to pivot their portfolios holistically. 986 00:47:04,320 --> 00:47:07,440 Speaker 1: Great stuff, Aquila Graywell, Global Head of Credit Products at Apollo, 987 00:47:07,480 --> 00:47:09,239 Speaker 1: It's been a pleasure having you on the Credit Edge Money. 988 00:47:09,280 --> 00:47:09,480 Speaker 2: Thanks. 989 00:47:09,719 --> 00:47:11,840 Speaker 1: Thank you, guys, and of course to Matt Goinner with 990 00:47:11,880 --> 00:47:13,879 Speaker 1: Bloomberg Intelligence, thank you very much for being on the show. 991 00:47:14,000 --> 00:47:17,600 Speaker 1: Thanks guys. Bloomberg Intelligence is part of Bloomberg's research department, 992 00:47:17,640 --> 00:47:20,520 Speaker 1: with five hundred analysts and strategists working across all markets. 993 00:47:20,680 --> 00:47:23,239 Speaker 1: Coverage includes over two thousand equities and credits, as well 994 00:47:23,280 --> 00:47:25,920 Speaker 1: as outlooks on more than ninety industries and one hundred 995 00:47:25,960 --> 00:47:30,160 Speaker 1: market industries, currencies and commodities. Please do subscribe wherever you 996 00:47:30,200 --> 00:47:32,839 Speaker 1: get your podcasts. We're on Apple, Spotify, and all other 997 00:47:32,880 --> 00:47:36,560 Speaker 1: good providers, including the Bloomberg terminal at bpod Go, give 998 00:47:36,640 --> 00:47:39,280 Speaker 1: us a review, tell your friends, or email me directly 999 00:47:39,320 --> 00:47:43,040 Speaker 1: at jcromby eight at Bloomberg dot net. I'm James Crombie. 1000 00:47:43,040 --> 00:47:44,839 Speaker 1: It's been a pleasure having you join us again. Next 1001 00:47:44,880 --> 00:47:46,000 Speaker 1: week on the Credit Edge