1
00:00:18,480 --> 00:00:21,160
Speaker 1: Hello, and welcome to The Credit Edge, a weekly markets podcast.

2
00:00:21,440 --> 00:00:24,120
Speaker 1: My name is James Crumbie. I'm a senior editor at Bloomberg.

3
00:00:24,680 --> 00:00:26,439
Speaker 1: This week, we're very pleased to have on the show

4
00:00:26,520 --> 00:00:29,640
Speaker 1: Claire Rukin, who covers credit markets for Bloomberg News in London.

5
00:00:29,680 --> 00:00:31,640
Speaker 2: How are you, Claire, I'm good, Thank you, James.

6
00:00:31,800 --> 00:00:33,520
Speaker 1: Very excited to get your take on the markets. Thanks

7
00:00:33,560 --> 00:00:36,479
Speaker 1: so much for joining. We're also delighted to welcome back

8
00:00:36,560 --> 00:00:40,960
Speaker 1: Tollu Alamutu, a credit and analyst with Bloomberg Intelligence, also

9
00:00:41,000 --> 00:00:42,840
Speaker 1: based in London. How are you doing, Tollu?

10
00:00:43,080 --> 00:00:45,520
Speaker 3: I am great, Thank you, James, and we'll.

11
00:00:45,400 --> 00:00:46,800
Speaker 1: Be talking to Tolly a bit later in the show

12
00:00:46,800 --> 00:00:49,360
Speaker 1: about distress in the real estate sector. So do stay

13
00:00:49,360 --> 00:00:53,000
Speaker 1: with us. But first, Claire Rukin with Bloomberg News, you're

14
00:00:53,040 --> 00:00:56,520
Speaker 1: all over the leverage finance story. Leverage loans, junk bonds,

15
00:00:56,560 --> 00:01:00,560
Speaker 1: collateralized loan obligations, all the really risky stuff. For our

16
00:01:00,560 --> 00:01:03,440
Speaker 1: listeners who don't know though, what is leverage finance, How

17
00:01:03,440 --> 00:01:05,880
Speaker 1: does it work? What kinds of companies are we talking about?

18
00:01:05,959 --> 00:01:08,600
Speaker 1: And you know, just give us a sense of what's

19
00:01:08,640 --> 00:01:08,920
Speaker 1: going on.

20
00:01:09,280 --> 00:01:12,800
Speaker 2: Okay, all right, So leverage finance is finance that borrowers

21
00:01:12,840 --> 00:01:16,160
Speaker 2: take on where their debtor earnings would be more than

22
00:01:16,200 --> 00:01:20,200
Speaker 2: the better rated investment grade companies. So for all intents

23
00:01:20,200 --> 00:01:23,039
Speaker 2: and purposes, this is junk debt. And it can come

24
00:01:23,080 --> 00:01:26,600
Speaker 2: in various forms like, as you said, leverage loans, high bonds,

25
00:01:26,680 --> 00:01:31,920
Speaker 2: private credit, and it's provided by various lenders including investment banks,

26
00:01:32,319 --> 00:01:38,839
Speaker 2: institutional investors, credit managers, and it's basically everywhere. There's lots

27
00:01:38,840 --> 00:01:42,200
Speaker 2: of companies that have leverage finance that people would never

28
00:01:42,240 --> 00:01:45,000
Speaker 2: have heard of, but there's lots of companies that they

29
00:01:45,080 --> 00:01:48,160
Speaker 2: will have done. So if I think about stories that

30
00:01:48,160 --> 00:01:54,560
Speaker 2: I've written recently, it's for borrowers including Morrison's Supermarkets, Twitter,

31
00:01:55,120 --> 00:01:59,280
Speaker 2: Well Pay the Payment Processor, and BurgerKing Zoner.

32
00:01:59,440 --> 00:02:02,480
Speaker 1: Twitter now known as X by the way, yes, yes,

33
00:02:02,680 --> 00:02:05,520
Speaker 1: that is right. So these are companies that we've all

34
00:02:05,560 --> 00:02:07,919
Speaker 1: heard of. They are in the high street, so they're

35
00:02:08,160 --> 00:02:11,640
Speaker 1: definitely identifiable. So why is there a comeback? Why are

36
00:02:11,639 --> 00:02:12,960
Speaker 1: they borrowing more money right now?

37
00:02:14,040 --> 00:02:17,000
Speaker 2: They're borrowing more money at the moment because for the

38
00:02:17,000 --> 00:02:19,400
Speaker 2: first time in a while, i'd say about eighteen months,

39
00:02:20,120 --> 00:02:24,560
Speaker 2: the market fills COMMA financial markets feel good and it

40
00:02:24,680 --> 00:02:28,399
Speaker 2: means that investors have more appetite for risk. Banks feel

41
00:02:28,480 --> 00:02:31,840
Speaker 2: more comfortable about lending, and so there's like an opportunity

42
00:02:31,880 --> 00:02:35,480
Speaker 2: in the market for borrowers to come and raise money.

43
00:02:36,120 --> 00:02:39,919
Speaker 2: If we look at what happened post Russia Ukraine, there

44
00:02:39,919 --> 00:02:44,000
Speaker 2: were issues over inflation, interest rates were rising, and banks

45
00:02:44,000 --> 00:02:46,840
Speaker 2: were caught with billions of dollars of debt on their

46
00:02:46,840 --> 00:02:50,520
Speaker 2: books that they just couldn't sell. Investors didn't want to buy.

47
00:02:51,000 --> 00:02:54,519
Speaker 2: But now if we look at market conditions, when people

48
00:02:54,520 --> 00:02:57,880
Speaker 2: think about recession, they think about a lot of them

49
00:02:57,919 --> 00:03:01,639
Speaker 2: think about soft landings. There's more visibility on where people

50
00:03:01,680 --> 00:03:05,040
Speaker 2: think interest rates will peak, and therefore we're starting to

51
00:03:05,120 --> 00:03:08,400
Speaker 2: see a return of fund raising. There's a nascent return

52
00:03:08,520 --> 00:03:14,040
Speaker 2: for the one point three trillion collasteral glasterized loan obligation market,

53
00:03:14,960 --> 00:03:17,800
Speaker 2: and they need to put money to work. Investors need

54
00:03:17,840 --> 00:03:22,079
Speaker 2: to put money to work, and therefore borrowers seeking this

55
00:03:22,160 --> 00:03:24,200
Speaker 2: moment to raise more money.

56
00:03:24,440 --> 00:03:26,400
Speaker 1: So it's more than just a September effect, because we

57
00:03:26,440 --> 00:03:29,520
Speaker 1: always see a big rush in September to issue bonds

58
00:03:29,560 --> 00:03:32,000
Speaker 1: and loans and everything else in the capital markets. But

59
00:03:32,120 --> 00:03:33,720
Speaker 1: there is something more going on. It's sort of pent

60
00:03:33,840 --> 00:03:35,840
Speaker 1: up supply because it wasn't much done earlier than the year.

61
00:03:36,080 --> 00:03:39,520
Speaker 2: Yes, definitely. And if we look at volumes for leverage

62
00:03:39,520 --> 00:03:43,720
Speaker 2: loans and higher bonds globally, September to date, around forty

63
00:03:43,760 --> 00:03:47,280
Speaker 2: one billion has been raised. That compares to sixteen billion

64
00:03:47,560 --> 00:03:50,960
Speaker 2: in the same period last year. So yes, typically there

65
00:03:51,000 --> 00:03:54,200
Speaker 2: is a rush in September, but the markets just didn't

66
00:03:54,240 --> 00:03:57,800
Speaker 2: feel good last year whereas now they do. We haven't

67
00:03:57,800 --> 00:04:00,680
Speaker 2: seen that much M and A come through, so therefore

68
00:04:00,720 --> 00:04:04,520
Speaker 2: there isn't there aren't that many new places for people

69
00:04:04,560 --> 00:04:09,480
Speaker 2: to put money to work. Therefore, existing issuers of leverage

70
00:04:09,480 --> 00:04:12,120
Speaker 2: loans and hile bonds are coming to the market and

71
00:04:12,120 --> 00:04:15,360
Speaker 2: they're looking to refinance debt. They're looking to extend their debt.

72
00:04:15,640 --> 00:04:18,200
Speaker 2: They're even doing dells that are like real top of

73
00:04:18,240 --> 00:04:22,080
Speaker 2: the market dells, like taking dividends out of companies. So

74
00:04:22,400 --> 00:04:26,000
Speaker 2: they will raise debt, they will refinance their existing cap structure,

75
00:04:26,279 --> 00:04:29,160
Speaker 2: they ladd additional debt on and then they'll take that

76
00:04:29,200 --> 00:04:31,840
Speaker 2: back as a dividend and pay that to shareholders. This

77
00:04:31,880 --> 00:04:33,200
Speaker 2: is really hot market stuff.

78
00:04:33,480 --> 00:04:35,680
Speaker 1: When you say hot market and you're talking about leverage finance,

79
00:04:35,720 --> 00:04:37,200
Speaker 1: it sorts to scare me a bit. Should we be

80
00:04:37,240 --> 00:04:37,880
Speaker 1: worried about this?

81
00:04:41,400 --> 00:04:43,159
Speaker 2: These are junk rated borrowers.

82
00:04:44,120 --> 00:04:45,160
Speaker 3: Should it scare you?

83
00:04:45,960 --> 00:04:48,080
Speaker 2: I don't know. I guess it depends what your viewers

84
00:04:48,120 --> 00:04:50,640
Speaker 2: of the market. If you think interest rates are going

85
00:04:50,680 --> 00:04:53,920
Speaker 2: down like many borrowers are, then they will feel very

86
00:04:53,960 --> 00:04:57,360
Speaker 2: comfortable loading up their companies with debt. If you look

87
00:04:57,400 --> 00:05:00,600
Speaker 2: at where all prices are today, crude trude oil is

88
00:05:00,640 --> 00:05:03,159
Speaker 2: going towards one hundred dollars a barrel. If that's not

89
00:05:03,200 --> 00:05:06,000
Speaker 2: a blip and that's going to continue, then we need

90
00:05:06,080 --> 00:05:10,080
Speaker 2: to start thinking about inflation again, and central banks need

91
00:05:10,200 --> 00:05:12,960
Speaker 2: to start raising interest rates to deal with that, and

92
00:05:13,000 --> 00:05:16,960
Speaker 2: then the market can turn very quickly. So at the moment,

93
00:05:17,160 --> 00:05:19,600
Speaker 2: the market feels hotter than it has been for a while,

94
00:05:19,839 --> 00:05:22,720
Speaker 2: but as we know from our recent experience, the market

95
00:05:22,760 --> 00:05:24,520
Speaker 2: can shut as quickly as it opens.

96
00:05:24,920 --> 00:05:27,080
Speaker 1: So let's talk about the deals that you're seeing right now.

97
00:05:28,040 --> 00:05:30,640
Speaker 1: What kind of names are we seeing, where they interesting?

98
00:05:30,680 --> 00:05:33,200
Speaker 1: What kind of execution are they getting? They getting good

99
00:05:33,200 --> 00:05:34,280
Speaker 1: pricing at the moment.

100
00:05:34,760 --> 00:05:37,480
Speaker 2: They are, So we're starting to see some em and

101
00:05:37,520 --> 00:05:41,799
Speaker 2: air merge. We just had GTCR that's a private empty firm,

102
00:05:41,920 --> 00:05:46,839
Speaker 2: their acquisition of Well Paid and that's a massive company.

103
00:05:47,040 --> 00:05:50,520
Speaker 2: That's nine point four billion of debt across loans and

104
00:05:50,640 --> 00:05:55,279
Speaker 2: bonds dollars, euros, sterling, and it is the largest leverage

105
00:05:55,320 --> 00:06:00,440
Speaker 2: financing since the thirteen billion to back elon musks of

106
00:06:00,480 --> 00:06:05,400
Speaker 2: Twitter X last year. And so this is like a

107
00:06:05,440 --> 00:06:08,279
Speaker 2: real moment for the market where we're looking to see

108
00:06:08,320 --> 00:06:12,120
Speaker 2: what the appetite is, what the capacity is, where it's

109
00:06:12,160 --> 00:06:14,799
Speaker 2: going to go, Will it sell, how will it sell,

110
00:06:14,920 --> 00:06:18,680
Speaker 2: what is pricing like. And although pricing is higher than

111
00:06:18,720 --> 00:06:23,120
Speaker 2: it was, you know, eighteen months ago, it has tightened

112
00:06:23,360 --> 00:06:26,560
Speaker 2: from the start of the year, and so people are

113
00:06:26,600 --> 00:06:30,120
Speaker 2: starting to feel good about the market. And you know,

114
00:06:30,200 --> 00:06:33,599
Speaker 2: a sale of well Pay, a sale of other companies

115
00:06:33,640 --> 00:06:36,760
Speaker 2: that we're seeing from an M and A perspective, will

116
00:06:36,839 --> 00:06:40,880
Speaker 2: all basically encourage banks to start underwriting again. And we

117
00:06:40,960 --> 00:06:44,719
Speaker 2: are hearing about, dare I say it, the green shoots

118
00:06:44,800 --> 00:06:45,279
Speaker 2: of M and.

119
00:06:45,279 --> 00:06:48,599
Speaker 1: A and they're doing more in the loan market compared

120
00:06:48,600 --> 00:06:49,680
Speaker 1: to the bond market. Why is that.

121
00:06:50,520 --> 00:06:53,520
Speaker 2: Yeah, there has definitely been a preference for floating rate

122
00:06:53,600 --> 00:06:56,880
Speaker 2: over fixed rate. I just wrote something recently about this

123
00:06:58,040 --> 00:07:00,880
Speaker 2: on weld Pay. For example, they were looking at raising

124
00:07:00,920 --> 00:07:04,280
Speaker 2: loans and bonds. Loans are floating rates, so you pay

125
00:07:04,360 --> 00:07:08,839
Speaker 2: interest over a benchmark interest rate and bonds are fixed rate.

126
00:07:09,160 --> 00:07:12,200
Speaker 2: If you take a view that interest rates are coming down,

127
00:07:12,760 --> 00:07:16,120
Speaker 2: then what you pay for your debt today should in

128
00:07:16,120 --> 00:07:20,120
Speaker 2: effect be cheaper going forward, and that is why we're

129
00:07:20,120 --> 00:07:22,640
Speaker 2: seeing loans up size and bonds reduced.

130
00:07:22,960 --> 00:07:25,840
Speaker 1: And on the demand side, the investors, they're taking a

131
00:07:25,840 --> 00:07:27,480
Speaker 1: punt that things will go the other way? Are they

132
00:07:27,480 --> 00:07:30,280
Speaker 1: because they want floating rate? I mean, what's the investor proposition?

133
00:07:30,760 --> 00:07:34,080
Speaker 2: The investor proposition is just put money to work. And

134
00:07:34,120 --> 00:07:37,000
Speaker 2: we've got these new clos coming through. They are the

135
00:07:37,000 --> 00:07:40,920
Speaker 2: biggest buyers of leverage loans and they are they are

136
00:07:40,920 --> 00:07:41,880
Speaker 2: putting money to work.

137
00:07:42,120 --> 00:07:44,320
Speaker 1: Okay, so other than a big, splashy deal, I mean,

138
00:07:44,440 --> 00:07:46,400
Speaker 1: what else is the takeaway from the market. Are we're

139
00:07:46,400 --> 00:07:49,720
Speaker 1: getting more transparency, We're getting more pricing points. Are we

140
00:07:49,760 --> 00:07:52,000
Speaker 1: able to see where risk should price?

141
00:07:52,120 --> 00:07:52,320
Speaker 3: Is that?

142
00:07:52,400 --> 00:07:54,480
Speaker 1: Is that the benefit of this surge again?

143
00:07:54,720 --> 00:07:57,080
Speaker 2: Yeah, if we look at some recent deals in the

144
00:07:57,120 --> 00:08:00,160
Speaker 2: market that have just gone through, they range all the

145
00:08:00,160 --> 00:08:03,160
Speaker 2: way from double B to high single B to low

146
00:08:03,240 --> 00:08:06,800
Speaker 2: single B and we now have price points at those

147
00:08:06,840 --> 00:08:10,640
Speaker 2: three markers within the market. So that will definitely be

148
00:08:10,880 --> 00:08:16,200
Speaker 2: encouraging both for bankers that need transparency on where investor

149
00:08:16,200 --> 00:08:18,840
Speaker 2: appetite is and where they can underwrite and sell these

150
00:08:18,920 --> 00:08:21,840
Speaker 2: dells at. But also for investors, they now have a

151
00:08:21,880 --> 00:08:25,640
Speaker 2: reference point as to where things should be pricing. Given

152
00:08:25,680 --> 00:08:30,240
Speaker 2: the fact that there is demand but not too much

153
00:08:30,320 --> 00:08:34,160
Speaker 2: new supply, we should see the market dynamics kick in

154
00:08:34,600 --> 00:08:39,120
Speaker 2: and prices could tighten further. And that means also the

155
00:08:39,160 --> 00:08:43,720
Speaker 2: erosion of terms and documentation as well, because when banks

156
00:08:43,720 --> 00:08:45,920
Speaker 2: were caught with a lot of debt and investors didn't

157
00:08:45,960 --> 00:08:49,160
Speaker 2: have too much risk appetite, it was a chance for

158
00:08:49,320 --> 00:08:52,120
Speaker 2: the banks and investors to claw back some control when

159
00:08:52,160 --> 00:08:58,080
Speaker 2: it came to documentation. So we'll see what happens. But

160
00:08:58,840 --> 00:09:01,720
Speaker 2: if more dells come to the market, then we could

161
00:09:01,720 --> 00:09:03,320
Speaker 2: start to see an erosion of.

162
00:09:03,240 --> 00:09:05,959
Speaker 1: That and as you say, markets can turn very quickly.

163
00:09:06,000 --> 00:09:08,560
Speaker 1: When we started this year, we were very worried about

164
00:09:09,080 --> 00:09:11,800
Speaker 1: leverage finance. We're very worried particularly about the loans because

165
00:09:11,840 --> 00:09:16,520
Speaker 1: the you know, the interest rate isn't fixed and costs

166
00:09:16,559 --> 00:09:20,640
Speaker 1: will rise for the borrowers. Therefore potentially more defaults as

167
00:09:20,679 --> 00:09:22,959
Speaker 1: the economy slows. Should we expect that to happen? I

168
00:09:23,360 --> 00:09:25,319
Speaker 1: should we worry about defaults at this point?

169
00:09:25,800 --> 00:09:31,040
Speaker 2: Yes, something, it's something definitely to be mindful of. And

170
00:09:31,280 --> 00:09:33,720
Speaker 2: if we have a look at what borrowers have been doing,

171
00:09:33,760 --> 00:09:36,240
Speaker 2: there's been a real push to try and extend their

172
00:09:36,280 --> 00:09:39,520
Speaker 2: maturities so they don't have to worry about their deck

173
00:09:39,559 --> 00:09:43,160
Speaker 2: coming due, and typically borrows like to do that, you know,

174
00:09:43,280 --> 00:09:46,320
Speaker 2: eighteen months in advance. There are some borrowers that weren't

175
00:09:46,360 --> 00:09:49,559
Speaker 2: able to do that, and therefore they've got into difficulties

176
00:09:50,400 --> 00:09:53,000
Speaker 2: and sponsors then need to make a decision do they

177
00:09:53,040 --> 00:09:57,200
Speaker 2: put in more equity or do they not? And I

178
00:09:57,240 --> 00:10:00,840
Speaker 2: think going forward to the strongest companies far have managed

179
00:10:00,840 --> 00:10:04,560
Speaker 2: to amend and extend their existing capital structures, we are

180
00:10:04,600 --> 00:10:08,760
Speaker 2: now going to see some of the more risky companies

181
00:10:08,880 --> 00:10:12,079
Speaker 2: try and do that. But you know, we'll have to

182
00:10:12,120 --> 00:10:15,600
Speaker 2: see what the landscapes like and what the future has installed.

183
00:10:15,600 --> 00:10:18,960
Speaker 2: But you know, if energy prices are high, if earnings

184
00:10:19,000 --> 00:10:22,560
Speaker 2: are lower, the cost of debt is higher, there will

185
00:10:22,600 --> 00:10:26,640
Speaker 2: be questions around whether these highly leveraged companies can support

186
00:10:26,679 --> 00:10:29,079
Speaker 2: the debt structures that are in place, and whether the

187
00:10:29,200 --> 00:10:32,440
Speaker 2: banks want to refinance their debt and investors want to

188
00:10:32,440 --> 00:10:35,080
Speaker 2: refinance their debt, or whether they're going to need some

189
00:10:35,120 --> 00:10:36,839
Speaker 2: more support from their owners.

190
00:10:37,200 --> 00:10:39,400
Speaker 1: And the reason why we haven't seen more defaults. Do

191
00:10:39,400 --> 00:10:41,240
Speaker 1: you think that's because the covenants are so loose that

192
00:10:41,360 --> 00:10:43,320
Speaker 1: they're not forced into default at.

193
00:10:43,240 --> 00:10:47,600
Speaker 2: This point exactly. So covenant light basically means that we

194
00:10:47,640 --> 00:10:50,840
Speaker 2: don't really know about defaults until they can't pay the interest.

195
00:10:51,280 --> 00:10:53,960
Speaker 2: So in a way that can be useful because it

196
00:10:54,040 --> 00:10:59,400
Speaker 2: gives companies breathing space to be able to sort themselves out. However,

197
00:10:59,440 --> 00:11:03,000
Speaker 2: there are no early warning signs for investors where they

198
00:11:03,000 --> 00:11:05,959
Speaker 2: can try and reset covenants to reset and they can

199
00:11:06,000 --> 00:11:08,319
Speaker 2: work with the companies earlier on to try and get

200
00:11:08,360 --> 00:11:10,840
Speaker 2: them through what might be a difficult period.

201
00:11:11,400 --> 00:11:13,959
Speaker 1: Investors have had a great year in leverage finance, leveraged

202
00:11:14,000 --> 00:11:16,280
Speaker 1: loans particularly, they've you know, ten percent returns on the

203
00:11:16,360 --> 00:11:21,880
Speaker 1: US loans this year compared to expectations of zero pretty

204
00:11:21,880 --> 00:11:24,319
Speaker 1: negative when we were starting the year. So if you

205
00:11:24,360 --> 00:11:27,319
Speaker 1: took on a lot of risks, you got well rewarded again,

206
00:11:27,480 --> 00:11:29,520
Speaker 1: you know. Come back to the issue of the economy

207
00:11:29,520 --> 00:11:35,000
Speaker 1: slowing down, rates still very high, companies under pressure. We

208
00:11:35,160 --> 00:11:38,280
Speaker 1: just sort of fooling ourselves. Is the apocalypse yet to come?

209
00:11:38,440 --> 00:11:39,600
Speaker 1: Has it just been delayed?

210
00:11:40,640 --> 00:11:43,760
Speaker 2: I actually have no idea. I don't if I did,

211
00:11:43,840 --> 00:11:46,760
Speaker 2: maybe I wouldn't be be a journalist just reporting on it,

212
00:11:46,920 --> 00:11:49,040
Speaker 2: or I think everyone would love to have that answer.

213
00:11:49,400 --> 00:11:52,120
Speaker 2: But it is definitely about taking a view at the moment.

214
00:11:52,240 --> 00:11:55,559
Speaker 2: Some investors have more risk appetite and they have definitely

215
00:11:55,559 --> 00:11:58,800
Speaker 2: been enjoying this period. Others that you speak to are

216
00:11:58,840 --> 00:12:02,360
Speaker 2: taking a far moreous approach. They'll really have a think

217
00:12:02,400 --> 00:12:05,760
Speaker 2: about the quality of the credit, the rating, the sector,

218
00:12:05,960 --> 00:12:08,320
Speaker 2: and they'll really be doing a lot more homework at

219
00:12:08,320 --> 00:12:11,079
Speaker 2: the moment before investing in anything. And the same can

220
00:12:11,080 --> 00:12:13,800
Speaker 2: be said for banks as well. Before they underwrite something,

221
00:12:13,840 --> 00:12:16,920
Speaker 2: they're doing a lot of homework. There is a lot

222
00:12:16,920 --> 00:12:21,319
Speaker 2: of research going on behind these credits and their quality

223
00:12:21,559 --> 00:12:24,640
Speaker 2: and how much they can withstand tricky market conditions.

224
00:12:25,720 --> 00:12:30,160
Speaker 1: Great, So, before we talk to Toller about real estate, what

225
00:12:30,160 --> 00:12:32,640
Speaker 1: else is on your radar? What's the next big story?

226
00:12:32,640 --> 00:12:34,120
Speaker 1: What else are you looking at?

227
00:12:34,559 --> 00:12:36,280
Speaker 2: I don't know. I'm looking for M and A at

228
00:12:36,320 --> 00:12:38,200
Speaker 2: the moment. There's a lot of P to p's that

229
00:12:38,240 --> 00:12:42,600
Speaker 2: will be taking place, so public to private transactions we're hearing.

230
00:12:42,600 --> 00:12:46,839
Speaker 2: There's lots of conversations behind closed doors about those nice, big,

231
00:12:46,960 --> 00:12:51,040
Speaker 2: chunky new dells. That's what I want to report on

232
00:12:51,240 --> 00:12:54,000
Speaker 2: and we'll see whether it happens or not. There seems

233
00:12:54,040 --> 00:12:58,800
Speaker 2: to be far more realistic conversations happening now between buyers

234
00:12:58,800 --> 00:13:02,960
Speaker 2: and sellers when it comes to valuations. The financing markets

235
00:13:02,960 --> 00:13:07,800
Speaker 2: for now seem open, so that's definitely providing a more

236
00:13:07,800 --> 00:13:09,880
Speaker 2: conducive environment to M and A.

237
00:13:10,160 --> 00:13:13,240
Speaker 1: But we'll see great stuff. Claire Rooking from Bloomberg News,

238
00:13:13,240 --> 00:13:14,360
Speaker 1: thank you so much for joining us.

239
00:13:14,440 --> 00:13:14,920
Speaker 2: Thank you.

240
00:13:15,360 --> 00:13:17,800
Speaker 1: Read all of Claire's scoops on the Bloomberg terminal and

241
00:13:17,880 --> 00:13:20,840
Speaker 1: of course at Bloomberg dot com. Right now, we're delighted

242
00:13:20,840 --> 00:13:23,320
Speaker 1: to welcome back on the credit edge Tollu Ala Mutu,

243
00:13:23,400 --> 00:13:26,839
Speaker 1: a credit analyst with Bloomberg Intelligence in London. How's it going, Tollu?

244
00:13:27,240 --> 00:13:29,240
Speaker 3: Not too bad? Thank you, James.

245
00:13:29,280 --> 00:13:30,120
Speaker 1: Great to see you again.

246
00:13:30,920 --> 00:13:31,400
Speaker 3: Thank you.

247
00:13:31,920 --> 00:13:34,000
Speaker 1: And as you told me earlier this week, all real

248
00:13:34,120 --> 00:13:36,760
Speaker 1: estate is always hot, so we're very excited to hear

249
00:13:36,800 --> 00:13:38,839
Speaker 1: what you have to say.

250
00:13:39,520 --> 00:13:42,600
Speaker 3: Thank you. Of course, real estate is always I think

251
00:13:44,000 --> 00:13:47,320
Speaker 3: people are always fascinated by what is going on in

252
00:13:47,360 --> 00:13:49,720
Speaker 3: the second not least because obviously it is the largest

253
00:13:50,040 --> 00:13:52,599
Speaker 3: asset class in the world, but also because it affects

254
00:13:52,640 --> 00:13:55,240
Speaker 3: every single thing that we do, doesn't It it's where

255
00:13:55,280 --> 00:13:56,800
Speaker 3: you live, it's where you go to work, it's where

256
00:13:56,840 --> 00:14:01,280
Speaker 3: you shop or don't shop, and there about warehouses and

257
00:14:01,360 --> 00:14:06,120
Speaker 3: so on. So it permeates every single aspect of our lives.

258
00:14:06,160 --> 00:14:10,360
Speaker 3: So people are always focused on it. Also, given what

259
00:14:10,440 --> 00:14:13,240
Speaker 3: happened in the markets last year in terms of performance

260
00:14:13,280 --> 00:14:16,760
Speaker 3: of real estate, it's been at the four of people's mind.

261
00:14:16,840 --> 00:14:20,880
Speaker 3: I mean the losses in the European real estate sector,

262
00:14:21,040 --> 00:14:25,800
Speaker 3: real estate bond market sorry, exceeded twenty percent. And after that,

263
00:14:25,920 --> 00:14:29,720
Speaker 3: of course people have started to look at what might

264
00:14:29,960 --> 00:14:34,080
Speaker 3: happen this year, how might this year end? Might there

265
00:14:34,160 --> 00:14:35,760
Speaker 3: be more pain to come?

266
00:14:36,440 --> 00:14:39,160
Speaker 1: So let's have a look at Belder. It's a real

267
00:14:39,240 --> 00:14:43,920
Speaker 1: estate company in Sweden. Now that's a country that we've

268
00:14:44,120 --> 00:14:46,560
Speaker 1: heard where we've heard a lot of trouble. It just

269
00:14:46,680 --> 00:14:48,600
Speaker 1: keeps coming up. We've already talked on this show about

270
00:14:48,600 --> 00:14:52,440
Speaker 1: the Swedish landlord SBB, which is described as the poster

271
00:14:52,520 --> 00:14:56,520
Speaker 1: child for the country's property crisis. What is the situation

272
00:14:56,600 --> 00:14:59,240
Speaker 1: totally with Belder? How much debt do they have, where

273
00:14:59,280 --> 00:15:00,880
Speaker 1: is it trading? How much trouble that they really in?

274
00:15:01,160 --> 00:15:06,320
Speaker 3: Okay, Well, Bowder has I guess differentiated itself from SBB

275
00:15:06,560 --> 00:15:09,840
Speaker 3: in some ways, and I think one key way has

276
00:15:09,960 --> 00:15:16,800
Speaker 3: been in them raising some capital last year and in

277
00:15:16,920 --> 00:15:21,360
Speaker 3: calling hybrid earlier this year. So I think they are

278
00:15:21,520 --> 00:15:28,280
Speaker 3: seen as stronger than sbb is in that they have

279
00:15:28,400 --> 00:15:33,520
Speaker 3: been more proactive. I think that is a positive for

280
00:15:34,120 --> 00:15:39,720
Speaker 3: Sweden in general because it means that rather than painting

281
00:15:40,080 --> 00:15:43,320
Speaker 3: the entire sector with the SBB brush, there has been

282
00:15:43,400 --> 00:15:47,720
Speaker 3: differentiation in terms of the returns that you get from

283
00:15:47,800 --> 00:15:53,080
Speaker 3: holding these issue with security. So Bowder still trades very wide.

284
00:15:53,560 --> 00:15:57,960
Speaker 3: To put it in context, Bowder is still still has

285
00:15:58,040 --> 00:16:05,520
Speaker 3: one investment grade, but it is trading or yielding more

286
00:16:05,560 --> 00:16:10,440
Speaker 3: than even some double beat securities, or the bonds or

287
00:16:10,440 --> 00:16:12,320
Speaker 3: the senior bonds are yielding more than that. So that

288
00:16:12,360 --> 00:16:16,359
Speaker 3: tells you that investors are not at the moment assigning

289
00:16:16,840 --> 00:16:19,880
Speaker 3: much of a weight to the ratings.

290
00:16:20,120 --> 00:16:22,040
Speaker 1: But what is the company, what do they do and

291
00:16:22,080 --> 00:16:24,040
Speaker 1: why are they trading so wide?

292
00:16:24,720 --> 00:16:31,640
Speaker 3: So Bowder is involved in commercial real estate. They are

293
00:16:32,240 --> 00:16:36,760
Speaker 3: have a residential portfolio, but also have some offices and hotels,

294
00:16:37,800 --> 00:16:44,480
Speaker 3: so that it's a diverse portfolio. However, they have come

295
00:16:45,920 --> 00:16:49,480
Speaker 3: under pressure for a number of reasons. First is the

296
00:16:49,560 --> 00:16:52,680
Speaker 3: amount of debt that they have. They are highly levered,

297
00:16:52,720 --> 00:16:56,280
Speaker 3: like many in the sector. Second is the exposure to

298
00:16:56,800 --> 00:17:01,880
Speaker 3: floating rates. So in the local Swedish market there has

299
00:17:01,920 --> 00:17:05,840
Speaker 3: been a tendency to issue floating rate debt, and as

300
00:17:05,920 --> 00:17:08,320
Speaker 3: interest rates have gone up, the cost of debt has

301
00:17:08,359 --> 00:17:13,119
Speaker 3: gone up, which has affected the financing costs, putting pressure

302
00:17:13,160 --> 00:17:16,120
Speaker 3: on the bottom line and also putting pressure on measures

303
00:17:16,200 --> 00:17:20,520
Speaker 3: like interest coverage. So they've faced some of the same

304
00:17:20,600 --> 00:17:23,680
Speaker 3: issues that I guess are the SBB. And someone has

305
00:17:23,680 --> 00:17:26,159
Speaker 3: has said and I guess the most important thing to

306
00:17:26,200 --> 00:17:29,919
Speaker 3: flag is what higher yields has meant for valuations. So

307
00:17:31,040 --> 00:17:36,320
Speaker 3: periodically real estate companies will revalue their asset portfolios and

308
00:17:37,280 --> 00:17:42,200
Speaker 3: put through those revaluations in the income statement. For Booder,

309
00:17:42,320 --> 00:17:45,360
Speaker 3: this has meant a loss so far here to day,

310
00:17:46,080 --> 00:17:49,600
Speaker 3: and there may be further losses to come. So the

311
00:17:50,000 --> 00:17:54,280
Speaker 3: loan to value may go up further, not just because

312
00:17:55,440 --> 00:17:57,560
Speaker 3: loans as in the amount of debt that they have

313
00:17:58,040 --> 00:18:01,720
Speaker 3: outstanding is probably staying high even though they're trying to delever,

314
00:18:02,720 --> 00:18:06,960
Speaker 3: but also because the value, which is the denominator, might

315
00:18:06,960 --> 00:18:08,120
Speaker 3: come under further pressure.

316
00:18:08,520 --> 00:18:11,120
Speaker 1: The fact that they're in Sweden is that just purely coincidental.

317
00:18:11,280 --> 00:18:12,360
Speaker 1: What's going on in Sweden.

318
00:18:13,480 --> 00:18:20,159
Speaker 3: I think it's not necessarily restricted to Sweden. I think

319
00:18:20,359 --> 00:18:23,439
Speaker 3: a lot of the trends that we have seen in

320
00:18:23,480 --> 00:18:26,840
Speaker 3: Sweden are also being seen elsewhere, and in that regard,

321
00:18:26,880 --> 00:18:30,240
Speaker 3: I guess you can look at one issuer called Timestad

322
00:18:30,280 --> 00:18:35,960
Speaker 3: and boss Dad, which is from Sweden but has operations

323
00:18:36,000 --> 00:18:39,359
Speaker 3: in at least I think nine countries, including Germany and

324
00:18:39,440 --> 00:18:44,600
Speaker 3: Denmark and the UK, and they are seeing valuation losses

325
00:18:44,920 --> 00:18:47,640
Speaker 3: in many of the countries that they operate, not just Sweden,

326
00:18:48,000 --> 00:18:51,440
Speaker 3: and actually the largest valuation loss that they saw in

327
00:18:51,600 --> 00:18:55,280
Speaker 3: the first quarter of this year was in Germany rather

328
00:18:55,320 --> 00:18:59,560
Speaker 3: than in Sweden. So I would say that, yes, the

329
00:18:59,720 --> 00:19:03,040
Speaker 3: child or the focus seems to be on what's going

330
00:19:03,040 --> 00:19:07,280
Speaker 3: on in the Swedish market, but some of those trends

331
00:19:07,320 --> 00:19:11,600
Speaker 3: are being seen elsewhere. Also, the differentiator, I guess maybe

332
00:19:11,680 --> 00:19:17,120
Speaker 3: that the focus on floating rate debt was more significant

333
00:19:17,200 --> 00:19:21,840
Speaker 3: in Sweden, so as rates have gone up, that's affected

334
00:19:21,920 --> 00:19:24,960
Speaker 3: financing costs a lot more than perhaps some of the

335
00:19:25,000 --> 00:19:26,200
Speaker 3: other European peers.

336
00:19:26,320 --> 00:19:28,000
Speaker 1: Of course, that's a problem not just in the real

337
00:19:28,080 --> 00:19:29,879
Speaker 1: estate sector, it's you know, across the world. We're just

338
00:19:29,920 --> 00:19:32,520
Speaker 1: talking to Claire Ruken earlier from Bloomberg News about the

339
00:19:32,560 --> 00:19:35,320
Speaker 1: problems in the loans, you know, the challenges in the loans,

340
00:19:35,480 --> 00:19:39,000
Speaker 1: but also the opportunities right now to refinance those loans

341
00:19:39,000 --> 00:19:41,560
Speaker 1: and you know, take advantage of the demand. Why can't

342
00:19:41,800 --> 00:19:44,840
Speaker 1: companies like Balder and SPP just you know, take on

343
00:19:45,000 --> 00:19:46,359
Speaker 1: new debt and refinance that.

344
00:19:46,880 --> 00:19:52,320
Speaker 3: So we have seen some companies come to the Swedish market,

345
00:19:52,800 --> 00:19:56,119
Speaker 3: and we've seen a very few come back to the

346
00:19:56,160 --> 00:19:59,840
Speaker 3: Euro market as well, but not like they could perforce.

347
00:20:00,040 --> 00:20:05,200
Speaker 3: So to use one example, Castellum, which is another Swedish name,

348
00:20:05,560 --> 00:20:09,760
Speaker 3: has recently issued a bond, a two year bond in

349
00:20:09,800 --> 00:20:12,800
Speaker 3: the Swedish coroner market, which was the first time they

350
00:20:12,840 --> 00:20:15,520
Speaker 3: had issued i think since April or so of twenty

351
00:20:15,560 --> 00:20:18,639
Speaker 3: twenty two. So that return is a positive. But for

352
00:20:18,880 --> 00:20:22,120
Speaker 3: anituae like SBB, where the bonds are still trading at

353
00:20:22,320 --> 00:20:26,560
Speaker 3: very very distressed levels, I think for them it wouldn't

354
00:20:26,600 --> 00:20:29,439
Speaker 3: be possible really to come back to the markets, and

355
00:20:29,480 --> 00:20:33,480
Speaker 3: so for them at this point, perhaps it's best if

356
00:20:33,480 --> 00:20:37,160
Speaker 3: they continue to negotiate with existing creditors to try and

357
00:20:37,320 --> 00:20:41,080
Speaker 3: secure more funding to fill the whole that they have

358
00:20:41,280 --> 00:20:45,760
Speaker 3: personally disclosed for the next twelve months. So for SBB,

359
00:20:45,920 --> 00:20:49,879
Speaker 3: I think it's more tricky. Balder has not has issued

360
00:20:49,880 --> 00:20:55,840
Speaker 3: it convertible, but has not issued senior unsecured debt very recently.

361
00:20:55,920 --> 00:20:59,080
Speaker 3: We'll see whether they'll be able to do that soon.

362
00:20:59,720 --> 00:21:02,439
Speaker 3: But I think for some of the issuers that are

363
00:21:02,480 --> 00:21:06,080
Speaker 3: still trading at relatively high yield, there may be a

364
00:21:06,160 --> 00:21:13,520
Speaker 3: preference for disposals, for private placements, anything sort of away

365
00:21:13,560 --> 00:21:16,879
Speaker 3: from the public bond market while their debt remains at

366
00:21:16,920 --> 00:21:19,560
Speaker 3: the stress levels. But there are some that have been

367
00:21:19,600 --> 00:21:23,440
Speaker 3: able to access to markets, like a Stellum as I mentioned.

368
00:21:23,760 --> 00:21:25,800
Speaker 1: So we zoom out a bit. What's the root cause

369
00:21:25,800 --> 00:21:28,920
Speaker 1: of all this trouble in real estate? I mean, is

370
00:21:28,960 --> 00:21:31,439
Speaker 1: it still a hangover from the pandemic? Is it returned

371
00:21:31,440 --> 00:21:33,159
Speaker 1: to our office? Is it something else? Because you know,

372
00:21:33,240 --> 00:21:36,000
Speaker 1: as you started the podcast explaining, you know, it is

373
00:21:36,040 --> 00:21:38,880
Speaker 1: such a fundamental business. We all need somewhere to live,

374
00:21:39,400 --> 00:21:42,359
Speaker 1: you know, So why is real estate just struggling so

375
00:21:42,440 --> 00:21:43,040
Speaker 1: much right now?

376
00:21:43,840 --> 00:21:46,600
Speaker 3: I think it's a combination of things. But I think

377
00:21:47,119 --> 00:21:52,399
Speaker 3: that what really made the sector come on stuck, or

378
00:21:52,400 --> 00:21:54,159
Speaker 3: what has really made the sector come on starck, has

379
00:21:54,200 --> 00:21:59,840
Speaker 3: been the pace and the quantity of rate risers. So

380
00:22:00,000 --> 00:22:06,000
Speaker 3: so real estate is dependent on valuations. As we mentioned,

381
00:22:06,040 --> 00:22:13,320
Speaker 3: so when rates were zero or near zero, you probably

382
00:22:13,359 --> 00:22:19,320
Speaker 3: didn't have to demand that much in terms of when

383
00:22:19,359 --> 00:22:22,720
Speaker 3: you were asking for rent, or you didn't have to

384
00:22:22,720 --> 00:22:26,040
Speaker 3: put through significant rent increases. Your costs were kept low,

385
00:22:26,119 --> 00:22:30,639
Speaker 3: you could finance very cheaply, which is extremely important. You

386
00:22:30,680 --> 00:22:34,160
Speaker 3: could have transactions go through, you could sell real estate

387
00:22:34,200 --> 00:22:36,600
Speaker 3: by real estate if you wanted to. And many of

388
00:22:36,640 --> 00:22:42,200
Speaker 3: those companies actually were acquirers coming into the rate rise period.

389
00:22:42,320 --> 00:22:46,399
Speaker 3: So time Starting is one prime example. They did a

390
00:22:46,520 --> 00:22:50,920
Speaker 3: very significant acquisition in twenty twenty one, just before rates

391
00:22:50,920 --> 00:22:54,119
Speaker 3: started to rise. There's also Venovia, which is the largest

392
00:22:54,160 --> 00:22:58,520
Speaker 3: residential landlord in Germany. They also did a significant transaction

393
00:22:58,920 --> 00:23:02,320
Speaker 3: in twenty twenty one. Now, not that those transactions in

394
00:23:02,359 --> 00:23:06,920
Speaker 3: themselves were bad, but the timing meant that they happened

395
00:23:07,080 --> 00:23:10,639
Speaker 3: just before rates started to rise. And as rates rise

396
00:23:10,920 --> 00:23:16,119
Speaker 3: in general, the valuation of real estate can have or

397
00:23:16,400 --> 00:23:22,120
Speaker 3: maybe adjusted downwards. So the rate risers have affected valuations

398
00:23:22,240 --> 00:23:26,040
Speaker 3: but have also affected the access to financing, and they've

399
00:23:26,040 --> 00:23:29,960
Speaker 3: affected the transactions market. So we're seeing much less buying

400
00:23:29,960 --> 00:23:32,479
Speaker 3: and selling in real estate than we did before, and

401
00:23:32,640 --> 00:23:36,480
Speaker 3: that applies not just to the housing markets, but also

402
00:23:36,880 --> 00:23:38,760
Speaker 3: to the office and other markets as well.

403
00:23:39,200 --> 00:23:43,800
Speaker 1: And is this something that is a bigger problem than

404
00:23:43,880 --> 00:23:46,000
Speaker 1: just Sweden or even Europe? I mean, does it? Is

405
00:23:46,240 --> 00:23:49,280
Speaker 1: it a global issue? You know, is this an illustration

406
00:23:49,320 --> 00:23:51,400
Speaker 1: of something that you know, you could start seeing other

407
00:23:51,560 --> 00:23:53,280
Speaker 1: parts of the world. We already are seeing lots of

408
00:23:53,320 --> 00:23:57,440
Speaker 1: stress in commercial but it's just, you know, something you

409
00:23:57,480 --> 00:24:00,840
Speaker 1: think is emblematic of a biggerobal problem.

410
00:24:01,040 --> 00:24:02,960
Speaker 3: I think it's fair to say that it is. So.

411
00:24:03,640 --> 00:24:07,879
Speaker 3: We recently had a webinar with one of our colleagues

412
00:24:08,040 --> 00:24:11,160
Speaker 3: that covers real estate in China, for instance, and obviously

413
00:24:11,160 --> 00:24:16,280
Speaker 3: they're the challenges are very very well known and are

414
00:24:16,359 --> 00:24:20,560
Speaker 3: not yet resolved. And in the US as well, we

415
00:24:20,640 --> 00:24:27,400
Speaker 3: have colleagues that have covered that are covering offices and

416
00:24:27,640 --> 00:24:31,879
Speaker 3: other sub sectors that are also coming under pressure because

417
00:24:31,920 --> 00:24:35,600
Speaker 3: of the work from home trends and because of high rates.

418
00:24:35,680 --> 00:24:40,560
Speaker 3: So I'd say it's not necessarily something that's restricted to Europe.

419
00:24:41,359 --> 00:24:45,320
Speaker 3: It's a sector where we are seeing some stress difference

420
00:24:45,800 --> 00:24:48,960
Speaker 3: in some ways, but some stress globally as well.

421
00:24:49,280 --> 00:24:51,399
Speaker 1: And is there a read through for other sectors? I mean,

422
00:24:51,400 --> 00:24:52,600
Speaker 1: how exposed are the banks.

423
00:24:52,359 --> 00:24:56,440
Speaker 3: To this, Yeah, I think the read through is it

424
00:24:56,480 --> 00:24:59,160
Speaker 3: can be significant for a number of sectors. Obviously, banks

425
00:24:59,200 --> 00:25:02,879
Speaker 3: is the most obvious because they tend to be the

426
00:25:03,480 --> 00:25:08,480
Speaker 3: key lenders to real estate, but also because real estate

427
00:25:08,520 --> 00:25:11,359
Speaker 3: can serve us collateral against loans that have nothing to

428
00:25:11,480 --> 00:25:15,120
Speaker 3: do really with real estate, so people can use their

429
00:25:15,160 --> 00:25:20,360
Speaker 3: houses as security for loans to do something that's completely

430
00:25:20,400 --> 00:25:25,440
Speaker 3: unrelated to the home. So banks are seen as exposed,

431
00:25:25,840 --> 00:25:29,080
Speaker 3: but I think the exposure does differ quite a bit,

432
00:25:29,160 --> 00:25:35,480
Speaker 3: and judging from reading my bank colleagues research, the general

433
00:25:35,600 --> 00:25:38,680
Speaker 3: view seems to be that they are in a better

434
00:25:38,720 --> 00:25:42,320
Speaker 3: position now than perhaps they were historically to deal with

435
00:25:42,560 --> 00:25:45,679
Speaker 3: crises like this because of the amount of provisions that

436
00:25:45,680 --> 00:25:48,680
Speaker 3: they've set aside and because the regulator I think has

437
00:25:48,720 --> 00:25:53,160
Speaker 3: been a little bit more proactive. Having said that, there

438
00:25:53,200 --> 00:25:56,160
Speaker 3: are banks like in the Nordics whose ratings have come

439
00:25:56,240 --> 00:25:59,119
Speaker 3: under pressure because of their exposure to real estate. So

440
00:25:59,200 --> 00:26:02,080
Speaker 3: banks is an obvious one. But it's not just restricted

441
00:26:02,080 --> 00:26:05,679
Speaker 3: to banks, because we do know that non banks have

442
00:26:06,320 --> 00:26:09,440
Speaker 3: invested directly in real estate as well. So everyone from

443
00:26:09,480 --> 00:26:13,760
Speaker 3: asset managers to ensurism so on, is interested in what

444
00:26:13,800 --> 00:26:18,240
Speaker 3: happens that were exposed to what might happen in the sector, what's.

445
00:26:18,080 --> 00:26:19,720
Speaker 1: The next big thing to watch? Tot them, there's anything

446
00:26:19,760 --> 00:26:21,960
Speaker 1: else on your radar that we should be looking at.

447
00:26:23,240 --> 00:26:25,919
Speaker 3: As I said, real estate is always hot, so I

448
00:26:25,920 --> 00:26:29,360
Speaker 3: would still say that we should look out for all

449
00:26:29,400 --> 00:26:31,600
Speaker 3: things happening in the sector. But if I was to

450
00:26:31,600 --> 00:26:34,720
Speaker 3: be more specific than that, given my clear bias to

451
00:26:34,800 --> 00:26:40,520
Speaker 3: always consider it's important, I'd say that, first of all,

452
00:26:40,560 --> 00:26:44,679
Speaker 3: what happens with rates is vital. So if rates are

453
00:26:44,720 --> 00:26:47,480
Speaker 3: going to stay as high for long, then we need

454
00:26:47,520 --> 00:26:52,800
Speaker 3: to see many more real estate companies taking decisive action

455
00:26:52,920 --> 00:26:56,520
Speaker 3: on their debt because they may be okay for this year,

456
00:26:56,600 --> 00:26:59,359
Speaker 3: but there's still significant amounts of debt coming due in

457
00:26:59,400 --> 00:27:02,439
Speaker 3: twenty twenty five, four and twenty twenty five. Looking at

458
00:27:02,440 --> 00:27:06,200
Speaker 3: the figures earlier today, this over thirty billion due next

459
00:27:06,320 --> 00:27:09,560
Speaker 3: year for European real estate issuers and then another forty

460
00:27:09,600 --> 00:27:12,360
Speaker 3: odd billion due in the year after that. So rates,

461
00:27:12,440 --> 00:27:17,080
Speaker 3: I think are crucial to watch. The next thing that's

462
00:27:17,080 --> 00:27:20,400
Speaker 3: crucial is what happens in the primary market. So we've

463
00:27:20,440 --> 00:27:24,040
Speaker 3: seen a very significant drop off in the amount of

464
00:27:24,040 --> 00:27:27,960
Speaker 3: trans that of new deals, new bonds that are placed.

465
00:27:28,080 --> 00:27:31,400
Speaker 3: So this year I believe the total amount issued by

466
00:27:31,680 --> 00:27:35,880
Speaker 3: European real estate issuers is less than eleven billion euros

467
00:27:35,920 --> 00:27:39,840
Speaker 3: equivalent compared to I think eighty billion or so in

468
00:27:39,960 --> 00:27:43,680
Speaker 3: twenty twenty one and thirty odd billion or so last year.

469
00:27:43,800 --> 00:27:48,960
Speaker 3: So if the primary markets open up in a significant way,

470
00:27:49,040 --> 00:27:51,879
Speaker 3: that will ease the pressures that there are in the

471
00:27:52,480 --> 00:27:55,720
Speaker 3: about funding or the questions that there have been about

472
00:27:56,200 --> 00:27:59,880
Speaker 3: funding for these issuers, and people won't be worried about

473
00:28:00,800 --> 00:28:02,720
Speaker 3: or that those issuers have coming to you.

474
00:28:04,200 --> 00:28:06,800
Speaker 1: Thanks very much, Tello Alimu two of Bloomberg Intelligence. You

475
00:28:06,840 --> 00:28:09,680
Speaker 1: can read all of her great analysis on the Bloomberg Terminal.

476
00:28:09,720 --> 00:28:11,520
Speaker 1: Do check it out and we hope to see you

477
00:28:11,560 --> 00:28:14,159
Speaker 1: back on the show soon. Tello, Thank you, James, and

478
00:28:14,240 --> 00:28:17,119
Speaker 1: thanks again to Claire Rukin from Bloomberg News. Read all

479
00:28:17,160 --> 00:28:19,600
Speaker 1: of her great credit scoops on the terminal and at

480
00:28:19,600 --> 00:28:23,679
Speaker 1: Bloomberg dot com. Please do subscribe wherever you get your podcasts.

481
00:28:23,960 --> 00:28:27,000
Speaker 1: We're on Apple, Google and Spotify. Give us a review,

482
00:28:27,000 --> 00:28:30,120
Speaker 1: tell your friends, or email me directly at Jcrumb eight

483
00:28:30,520 --> 00:28:34,199
Speaker 1: at Bloomberg dot net. That's J crumbycro M b i

484
00:28:34,280 --> 00:28:36,480
Speaker 1: E as in my surname and the number eight at

485
00:28:36,480 --> 00:28:39,800
Speaker 1: Bloomberg dot net. I'm James Cromby. It's been a pleasure

486
00:28:39,840 --> 00:28:42,479
Speaker 1: having you join us again next week on the Credit

487
00:28:42,640 --> 00:28:42,840
Speaker 1: Edge