1 00:00:18,520 --> 00:00:21,360 Speaker 1: Hello, and welcome to the Credit Edge, a weekly markets podcast. 2 00:00:21,680 --> 00:00:24,120 Speaker 1: My name is James Crumbie. I'm a senior editor at Bloomberg. 3 00:00:24,560 --> 00:00:27,040 Speaker 1: This week, we're very pleased to welcome Mark Jenkins, global 4 00:00:27,040 --> 00:00:28,960 Speaker 1: head of credit at Carlyle. How are you Mark? 5 00:00:29,320 --> 00:00:29,480 Speaker 2: Oh? 6 00:00:29,520 --> 00:00:31,240 Speaker 3: Great, James, thanks for having me on today. 7 00:00:31,480 --> 00:00:33,519 Speaker 1: Thank you so much for joining us. We're excited to 8 00:00:33,520 --> 00:00:36,680 Speaker 1: dig into your market views and the outlook. Also delighted 9 00:00:36,720 --> 00:00:39,159 Speaker 1: to welcome back Lisa Lee, who covers credit markets for 10 00:00:39,159 --> 00:00:41,400 Speaker 1: Bloomberg News in London. Great to see you in Lisa, 11 00:00:41,800 --> 00:00:45,720 Speaker 1: happy to be here and from Bloomberg Intelligence. Excellent to 12 00:00:45,720 --> 00:00:48,120 Speaker 1: have back on the show. Rob Schiffman, Welcome back, Rob. 13 00:00:48,560 --> 00:00:49,640 Speaker 4: Never bit more pumped. 14 00:00:50,000 --> 00:00:50,280 Speaker 2: Great. 15 00:00:50,320 --> 00:00:52,239 Speaker 1: So let's start with you Mark. It's great to have 16 00:00:52,280 --> 00:00:54,960 Speaker 1: you on the Credit Edge. But before we dig into 17 00:00:54,960 --> 00:00:57,120 Speaker 1: the specifics of your portfolio and where you see the 18 00:00:57,120 --> 00:00:59,920 Speaker 1: best opportunities and of course the risks, let's talk about 19 00:01:00,080 --> 00:01:04,280 Speaker 1: your macroviews and in particular the Federal Reserve. So rate 20 00:01:04,319 --> 00:01:07,640 Speaker 1: cut bets are being dialed down some options traders are 21 00:01:07,640 --> 00:01:10,560 Speaker 1: even betting on hikes by the Fed this year. Compare 22 00:01:10,560 --> 00:01:12,759 Speaker 1: that to only a few months ago when markets were 23 00:01:12,760 --> 00:01:16,040 Speaker 1: pricing extremely dubbish monetary policy with a lot of rate 24 00:01:16,080 --> 00:01:18,920 Speaker 1: cuts coming starting as soon as March. That's all flipped 25 00:01:18,959 --> 00:01:21,720 Speaker 1: as inflation data continues to come in high. At the 26 00:01:21,760 --> 00:01:24,880 Speaker 1: same time, though the US economy seems strong. Consumers are 27 00:01:24,880 --> 00:01:28,160 Speaker 1: still buying despite the higher prices. Maybe the dreaded recession 28 00:01:28,200 --> 00:01:31,240 Speaker 1: that everyone's been fearing won't actually happen. So where does 29 00:01:31,280 --> 00:01:33,600 Speaker 1: that leave credit mark? Everyone who comes on this show 30 00:01:33,640 --> 00:01:36,440 Speaker 1: sounds really bullish, even though rates will probably stay high 31 00:01:36,480 --> 00:01:37,600 Speaker 1: for longer. What's your take? 32 00:01:38,640 --> 00:01:40,920 Speaker 5: Yeah, I think, well, the house view of Carlisle has 33 00:01:40,920 --> 00:01:42,880 Speaker 5: been for quite some time. I think over the past 34 00:01:42,880 --> 00:01:44,720 Speaker 5: twelve months, the rates were going to stay higher for 35 00:01:44,800 --> 00:01:47,600 Speaker 5: longer for a lot of the economic strengths that you're 36 00:01:47,600 --> 00:01:51,680 Speaker 5: seeing today, which is the consumer relatively good shape. As 37 00:01:51,720 --> 00:01:54,640 Speaker 5: we went through twenty twenty three, corporates more or less 38 00:01:54,920 --> 00:01:56,600 Speaker 5: because of lack of activity on the M and A 39 00:01:56,680 --> 00:01:59,400 Speaker 5: side had nothing else to do with their cash excess 40 00:01:59,400 --> 00:02:01,920 Speaker 5: cash down balance sheets, so they came into twenty twenty 41 00:02:01,960 --> 00:02:05,360 Speaker 5: four with quite strong balance sheets. And of course, you 42 00:02:05,360 --> 00:02:09,120 Speaker 5: know the third quarter numbers in our portfolios, especially in 43 00:02:09,160 --> 00:02:14,000 Speaker 5: our COLO portfolios, showed quite significant strength and EBADOG growth 44 00:02:14,400 --> 00:02:16,200 Speaker 5: into the third quarter, and you know, we're starting to 45 00:02:16,240 --> 00:02:19,200 Speaker 5: get fourth quarter numbers in so net net at a 46 00:02:19,280 --> 00:02:20,120 Speaker 5: macro level. 47 00:02:20,400 --> 00:02:21,399 Speaker 3: From a credit. 48 00:02:21,120 --> 00:02:25,120 Speaker 5: Perspective, companies look good coming into twenty twenty four, and 49 00:02:25,360 --> 00:02:28,880 Speaker 5: with the backdrop of more healthy capital markets, I would 50 00:02:28,880 --> 00:02:31,960 Speaker 5: say we see a very interesting market over the course 51 00:02:31,960 --> 00:02:33,760 Speaker 5: of this year for investment activity. 52 00:02:34,919 --> 00:02:37,160 Speaker 1: So some people say, when we ask them about the risks, 53 00:02:37,160 --> 00:02:38,520 Speaker 1: that the risk is that we do you know, we're 54 00:02:38,520 --> 00:02:40,520 Speaker 1: too bearish, that we haven't sort of leaned in enough 55 00:02:40,560 --> 00:02:42,480 Speaker 1: to the risk. Would you say that's true. Do you 56 00:02:42,480 --> 00:02:44,200 Speaker 1: think that you know you should take on a lot 57 00:02:44,240 --> 00:02:45,480 Speaker 1: more credit risk at this point? 58 00:02:45,960 --> 00:02:48,560 Speaker 5: Well, I would say, you know, taking on risk is 59 00:02:48,560 --> 00:02:52,480 Speaker 5: a relative value proposition. So what risk are you taking 60 00:02:52,480 --> 00:02:55,520 Speaker 5: on relative to what other asset classes? So let's say equity, 61 00:02:55,720 --> 00:02:58,480 Speaker 5: and I would say today compared to you know, frankly 62 00:02:58,520 --> 00:03:02,800 Speaker 5: twenty twenty three or you know, pre COVID twenty nineteen, 63 00:03:03,919 --> 00:03:07,840 Speaker 5: credit on a risk adjusted basis, you know, basically derives 64 00:03:07,919 --> 00:03:10,720 Speaker 5: great relative value compared to some other asset classes. I mean, 65 00:03:10,760 --> 00:03:13,960 Speaker 5: you have base rates high rate now in an environment 66 00:03:14,120 --> 00:03:16,600 Speaker 5: which which is unusual by the way, where the economy 67 00:03:16,600 --> 00:03:20,760 Speaker 5: seems to still be healthy and growing, especially in North America. 68 00:03:20,960 --> 00:03:23,720 Speaker 5: But also in Europe are seeing some strength there, and 69 00:03:23,800 --> 00:03:28,280 Speaker 5: so you're benefiting from double digit credit returns high up 70 00:03:28,280 --> 00:03:31,320 Speaker 5: the capital structure that to us seems like good relative 71 00:03:31,400 --> 00:03:33,720 Speaker 5: risk return relative to equity evaluations. 72 00:03:34,320 --> 00:03:36,800 Speaker 1: So what I wanted to ask you about private credit 73 00:03:36,800 --> 00:03:39,880 Speaker 1: because that's what everyone seems to be very excited about 74 00:03:39,880 --> 00:03:42,440 Speaker 1: at the moment. A lot of our guests, you know, 75 00:03:42,640 --> 00:03:45,960 Speaker 1: they see a lot of growth there. Investors particularly think 76 00:03:45,960 --> 00:03:49,160 Speaker 1: that they can find higher returns with less default risk. 77 00:03:50,040 --> 00:03:52,080 Speaker 1: But at the same time, traditional lenders are fighting back. 78 00:03:52,080 --> 00:03:54,360 Speaker 1: There's a race of the bottom on prices, competition for 79 00:03:54,400 --> 00:03:58,000 Speaker 1: the deals heats up. Some are still calling it the 80 00:03:58,000 --> 00:03:59,720 Speaker 1: Golden age. What's your view, Mark, Do you think that 81 00:04:00,120 --> 00:04:03,200 Speaker 1: direct lending continues to grow at this really break net pace? 82 00:04:04,000 --> 00:04:06,760 Speaker 5: Well, I think, I mean, I think the Golden age. 83 00:04:06,880 --> 00:04:09,440 Speaker 5: Usually ages are defined in decades or centuries. I'm not 84 00:04:09,480 --> 00:04:11,760 Speaker 5: quite sure we've hit the Golden age yet, So you know, 85 00:04:11,760 --> 00:04:13,640 Speaker 5: maybe we should come back to that ten years from 86 00:04:13,680 --> 00:04:15,440 Speaker 5: now and see if it was the Golden age. 87 00:04:15,440 --> 00:04:16,480 Speaker 3: I certainly think. 88 00:04:16,279 --> 00:04:20,920 Speaker 5: That the repricing in credit, which you know, was relative 89 00:04:20,960 --> 00:04:25,039 Speaker 5: to other asset classes. Repricing certainly benefited investors in the 90 00:04:25,080 --> 00:04:27,919 Speaker 5: credit space in twenty twenty three in particular, and it 91 00:04:27,960 --> 00:04:32,000 Speaker 5: continues to benefit them today. To your point, you know, 92 00:04:32,720 --> 00:04:35,039 Speaker 5: I think what we're seeing our default rates are staying 93 00:04:35,080 --> 00:04:38,160 Speaker 5: relatively muted. They're increasing. We expected them to be higher 94 00:04:38,240 --> 00:04:40,880 Speaker 5: last year. They're lower than we expected. We expect them 95 00:04:40,880 --> 00:04:43,440 Speaker 5: to trend up a bit this year. But there's nothing 96 00:04:43,640 --> 00:04:46,920 Speaker 5: what I would say that we find troubling on the horizon. 97 00:04:47,320 --> 00:04:49,880 Speaker 5: I think what we find troubling, because we're credit folks, 98 00:04:50,040 --> 00:04:52,279 Speaker 5: is that you have to say to yourself, you know, 99 00:04:52,320 --> 00:04:55,560 Speaker 5: how long can the economic expansion go on? And there's 100 00:04:55,600 --> 00:04:58,800 Speaker 5: a number of extraneous factors, you know, the massive monetary 101 00:04:58,880 --> 00:05:01,560 Speaker 5: and fiscal stimulus happened, you know, in the face of 102 00:05:01,600 --> 00:05:04,600 Speaker 5: COVID that we're just you know, inflation being one of 103 00:05:04,640 --> 00:05:07,640 Speaker 5: the big impacts of we're still working ourselves through. So 104 00:05:07,680 --> 00:05:09,440 Speaker 5: when are we going to get to a more normalized 105 00:05:09,440 --> 00:05:12,680 Speaker 5: economy whatever that is nowadays, and do we go back 106 00:05:12,680 --> 00:05:15,280 Speaker 5: to a normal cycle. So I think, you know, we're 107 00:05:15,279 --> 00:05:19,120 Speaker 5: cautious on you know, the next twelve months. Obviously, we're 108 00:05:19,120 --> 00:05:22,200 Speaker 5: more focused on, if you will, not going forward because 109 00:05:22,200 --> 00:05:24,760 Speaker 5: we think things are well being well priced in the 110 00:05:24,760 --> 00:05:28,159 Speaker 5: marketplace going forward. The bigger issue I think is what's 111 00:05:28,200 --> 00:05:31,680 Speaker 5: in people's current portfolios that specifically we're priced in the 112 00:05:31,760 --> 00:05:34,919 Speaker 5: late twenty one or sorry, late twenty and through twenty 113 00:05:34,920 --> 00:05:37,680 Speaker 5: twenty one, where prices we're at all time highs from 114 00:05:37,680 --> 00:05:40,640 Speaker 5: a multiple perspective, and interest rates were virtually zero. I 115 00:05:40,640 --> 00:05:42,720 Speaker 5: think that is probably where the problems are right now. 116 00:05:43,360 --> 00:05:45,159 Speaker 2: And Mark, when you do look at those kind of 117 00:05:45,160 --> 00:05:47,719 Speaker 2: portfolios and those kind of deals, what do you think 118 00:05:47,880 --> 00:05:51,240 Speaker 2: of the default expectation? How will they deal with those problems? 119 00:05:51,560 --> 00:05:53,800 Speaker 2: And do you have any thoughts on recoveries because to me, 120 00:05:54,160 --> 00:05:57,960 Speaker 2: you can't look at defaults without recoveries and how will 121 00:05:57,960 --> 00:05:59,360 Speaker 2: that play out a new estimation? 122 00:05:59,680 --> 00:06:02,200 Speaker 5: Yeah, well, if you if you look through the course 123 00:06:02,240 --> 00:06:04,560 Speaker 5: at twenty twenty three, and you could see that recovery 124 00:06:04,640 --> 00:06:07,480 Speaker 5: rates were extremely low based on historic levels. I think 125 00:06:07,520 --> 00:06:10,320 Speaker 5: first lean, and I'm talking to bank syndicated low market 126 00:06:10,320 --> 00:06:13,039 Speaker 5: first lean recoveries not the private credit market, were like 127 00:06:13,160 --> 00:06:16,760 Speaker 5: around forty one cents, which is historically low. But the 128 00:06:16,880 --> 00:06:20,200 Speaker 5: rationale reasoning behind that, quite frankly, is a lot of 129 00:06:20,279 --> 00:06:24,040 Speaker 5: companies that lived through that fourteen year period of massive 130 00:06:24,279 --> 00:06:28,080 Speaker 5: monetary stimulus coming out of the GFC finally hit a 131 00:06:28,120 --> 00:06:31,720 Speaker 5: wall because you had base rates go up twenty one 132 00:06:32,080 --> 00:06:34,840 Speaker 5: percent over the course of less than a year, right 133 00:06:35,040 --> 00:06:37,560 Speaker 5: as the FED raise rates. Now that that actually just 134 00:06:37,640 --> 00:06:39,600 Speaker 5: cleaned up a system that probably should have been cleaned 135 00:06:39,680 --> 00:06:40,360 Speaker 5: up a while ago. 136 00:06:41,240 --> 00:06:42,240 Speaker 3: The companies that. 137 00:06:42,240 --> 00:06:45,440 Speaker 5: I'm referring to are actually very good companies with very 138 00:06:45,440 --> 00:06:49,520 Speaker 5: good underlying businesses, but frankly were financed in a period 139 00:06:49,520 --> 00:06:53,960 Speaker 5: of time where the expectation from you know, investors on 140 00:06:54,000 --> 00:06:56,000 Speaker 5: the equity side, where that rates were going to stay 141 00:06:56,080 --> 00:06:58,960 Speaker 5: low and had been by the way, you know, they've 142 00:06:58,960 --> 00:07:01,320 Speaker 5: been conditioned because they'd live through an extremely low rate 143 00:07:01,440 --> 00:07:05,280 Speaker 5: environment for fourteen years. That's changed now, you know, do 144 00:07:05,320 --> 00:07:07,839 Speaker 5: we think rates will come down screaming back four hundred 145 00:07:07,839 --> 00:07:10,920 Speaker 5: basis points? I don't like, We're not good at calling rates. 146 00:07:10,960 --> 00:07:13,640 Speaker 5: I don't think that's our job. Our jobs to investory cycles. 147 00:07:14,120 --> 00:07:16,960 Speaker 5: But I think, you know, the survey would say a 148 00:07:16,960 --> 00:07:19,880 Speaker 5: lot of people would think that's probably not occurring. And 149 00:07:20,000 --> 00:07:22,600 Speaker 5: if so, we've got to recognize we're in a more 150 00:07:23,240 --> 00:07:26,600 Speaker 5: normalized environment where monetary stimulus isn't going to save the day. 151 00:07:26,680 --> 00:07:29,600 Speaker 5: So I think from an investor's perspective, you should start 152 00:07:29,640 --> 00:07:32,080 Speaker 5: thinking of what it was like to invest before the 153 00:07:32,080 --> 00:07:35,760 Speaker 5: financial crisis before there was this artificial stimulus from the 154 00:07:35,760 --> 00:07:39,440 Speaker 5: monetary side, and that's where I think the credit skills 155 00:07:39,440 --> 00:07:41,560 Speaker 5: and looking at these companies to say, is there good 156 00:07:41,600 --> 00:07:46,280 Speaker 5: underlying enterprise value relative to their liquidity value liquidity issues 157 00:07:46,320 --> 00:07:48,600 Speaker 5: that they have right now? Can we in some way 158 00:07:48,720 --> 00:07:52,320 Speaker 5: salvage that through instruments that get them to the other side? 159 00:07:52,360 --> 00:07:55,760 Speaker 5: And what I mean by that, Lisa, is are you 160 00:07:55,800 --> 00:07:58,840 Speaker 5: able to put structures that are credit related that actually 161 00:07:58,840 --> 00:08:02,000 Speaker 5: get down that cash burn that these companies are bearing 162 00:08:02,360 --> 00:08:04,640 Speaker 5: from the high levels of leverage that they put on 163 00:08:04,800 --> 00:08:08,160 Speaker 5: in late twenty one, sorry, late twenty twenty one, if you. 164 00:08:08,160 --> 00:08:10,840 Speaker 1: Will, the deals from that vintage mark How are you 165 00:08:10,920 --> 00:08:14,160 Speaker 1: spotting any stress? Are you looking at more payment in kind? 166 00:08:14,160 --> 00:08:16,520 Speaker 1: Are you looking at deals actually being marked down? I mean, 167 00:08:16,560 --> 00:08:18,720 Speaker 1: we had a big story today about marks on deals 168 00:08:19,000 --> 00:08:20,720 Speaker 1: and them being all over the place and really no 169 00:08:20,760 --> 00:08:23,800 Speaker 1: one knowing what to value these private deals at. How 170 00:08:23,800 --> 00:08:26,600 Speaker 1: do you actually see the stress in private credit? 171 00:08:27,360 --> 00:08:27,680 Speaker 3: Yeah? 172 00:08:28,440 --> 00:08:31,200 Speaker 5: I don't think it's any I mean the good indicator is, 173 00:08:31,240 --> 00:08:34,880 Speaker 5: and you referenced before the more buoyant capital markets, which 174 00:08:34,880 --> 00:08:37,679 Speaker 5: of course is the bank syndicated loan market. The banks 175 00:08:37,720 --> 00:08:41,760 Speaker 5: effectively through the year of twenty twenty three exited the market. 176 00:08:41,800 --> 00:08:44,199 Speaker 5: I mean for a lot of different reasons regulatory and 177 00:08:44,200 --> 00:08:46,840 Speaker 5: otherwise that they're dealing with continuing with, especially in the US. 178 00:08:47,480 --> 00:08:50,400 Speaker 5: They're back, and I think that's healthy for the marketplace. 179 00:08:51,360 --> 00:08:55,240 Speaker 5: But that doesn't alleviate to your point. These companies that 180 00:08:55,320 --> 00:08:58,840 Speaker 5: were financed in a much lower base rate environment, and 181 00:08:58,960 --> 00:09:03,280 Speaker 5: so we know when when valuation expectations were so much 182 00:09:03,360 --> 00:09:07,200 Speaker 5: higher because interest rates were driving those valuations higher. 183 00:09:07,240 --> 00:09:08,800 Speaker 3: When you're in a much higher rate environment. 184 00:09:09,240 --> 00:09:11,720 Speaker 5: You know, companies that might have sold for twenty times, 185 00:09:12,880 --> 00:09:15,120 Speaker 5: now you look at them from a credit perspective, and 186 00:09:15,160 --> 00:09:17,640 Speaker 5: we think that's good risk because we go, well, we 187 00:09:17,720 --> 00:09:19,560 Speaker 5: may never have thought it was worth twenty times, but 188 00:09:19,600 --> 00:09:21,040 Speaker 5: by the way, we were never going to lever it 189 00:09:21,080 --> 00:09:23,360 Speaker 5: more than six times. And now we can look at 190 00:09:23,360 --> 00:09:25,480 Speaker 5: a true enterprise value and say it might be worth 191 00:09:25,520 --> 00:09:28,240 Speaker 5: fifteen times, and we're still only levering it six times. 192 00:09:28,280 --> 00:09:31,720 Speaker 5: So it's a more realistic equity cushion, and it's a 193 00:09:31,760 --> 00:09:36,520 Speaker 5: more realistic ebadah leverage if you will, that we're looking 194 00:09:36,559 --> 00:09:37,400 Speaker 5: at in this environment. 195 00:09:37,440 --> 00:09:38,600 Speaker 3: And I think that's really important. 196 00:09:38,640 --> 00:09:40,560 Speaker 5: So it gets back to I think we've we've got 197 00:09:40,559 --> 00:09:45,040 Speaker 5: a much better visual on what we think equity valuations are. 198 00:09:45,080 --> 00:09:47,240 Speaker 5: I think it was hard to tell what it was 199 00:09:47,760 --> 00:09:50,400 Speaker 5: in that post COVID environment that had a lot of 200 00:09:50,960 --> 00:09:54,439 Speaker 5: extraneous stimulation going on from both the monetary and fiscal 201 00:09:54,480 --> 00:09:55,320 Speaker 5: side it. 202 00:09:55,440 --> 00:09:59,960 Speaker 4: Mark It's rupture and from Blomberg intelligence. With the low 203 00:10:00,160 --> 00:10:03,920 Speaker 4: market becoming much healthier, what sort of fears do you 204 00:10:03,960 --> 00:10:07,760 Speaker 4: have that LBO activity you will pick up and idiosyncratic 205 00:10:07,880 --> 00:10:11,839 Speaker 4: risk rises. How are you avoiding those headaches or or 206 00:10:11,840 --> 00:10:14,800 Speaker 4: are you thinking about participating in the lending side of that? 207 00:10:15,320 --> 00:10:17,640 Speaker 3: Yeah, well thanks, that's a great question. 208 00:10:18,160 --> 00:10:21,040 Speaker 5: I think we look at to say we never thought 209 00:10:21,080 --> 00:10:23,880 Speaker 5: it was a good thing that the capital markets weren't 210 00:10:24,360 --> 00:10:29,040 Speaker 5: healthy and vibrant, because in any good you know, financing ecosystem, 211 00:10:29,120 --> 00:10:32,600 Speaker 5: you need some tension between you know, different sources of capital, 212 00:10:33,000 --> 00:10:35,240 Speaker 5: and so private credit is a very good compliment to 213 00:10:35,280 --> 00:10:38,720 Speaker 5: what's going on on the bank syndicated loan side. And 214 00:10:38,800 --> 00:10:42,040 Speaker 5: I think what has happened is it's allowed It will 215 00:10:42,080 --> 00:10:45,720 Speaker 5: allow people buyers in the LBO side to be more confident, 216 00:10:45,800 --> 00:10:48,320 Speaker 5: to be able to step up and recognize that there's 217 00:10:48,320 --> 00:10:50,960 Speaker 5: going to be certain financing in place at frankly better 218 00:10:50,960 --> 00:10:55,960 Speaker 5: attractive levels you mentioned. I think earlier we're seeing pricing 219 00:10:56,000 --> 00:10:58,400 Speaker 5: come down in the marketplace from a spread perspective, and 220 00:10:58,440 --> 00:11:02,280 Speaker 5: that's absolutely right. You're seeing a lot of repricings. We 221 00:11:02,320 --> 00:11:05,320 Speaker 5: saw about seventy three billion of repricings in January alone 222 00:11:06,040 --> 00:11:08,480 Speaker 5: in the leverage loan market, and we're starting to see 223 00:11:08,480 --> 00:11:12,440 Speaker 5: repricings in the private credit market, you know. There our 224 00:11:12,520 --> 00:11:16,120 Speaker 5: deals are on average repricing between one hundred and one 225 00:11:16,160 --> 00:11:19,800 Speaker 5: hundred and fifty bases points tighter from a year ago. 226 00:11:21,080 --> 00:11:23,760 Speaker 5: But base rates haven't come down obviously, so for still 227 00:11:23,800 --> 00:11:25,760 Speaker 5: around five and a quarter five and a half, so 228 00:11:25,840 --> 00:11:29,000 Speaker 5: that's still a healthy coupon. But it speaks to what 229 00:11:29,000 --> 00:11:31,880 Speaker 5: you're saying is there's a healthy tension between both the 230 00:11:32,200 --> 00:11:35,319 Speaker 5: bank market, if you will, and the private credit market. 231 00:11:35,360 --> 00:11:37,760 Speaker 5: And I think that's good because then it gives buyers 232 00:11:38,000 --> 00:11:41,920 Speaker 5: in the LBO market more confidence to go to make acquisitions, 233 00:11:41,960 --> 00:11:45,360 Speaker 5: which drives our source of investment. And I think in 234 00:11:45,400 --> 00:11:48,760 Speaker 5: twenty twenty three what we recognized is, yeah, it's great 235 00:11:49,080 --> 00:11:51,120 Speaker 5: to be the only game in town from a private 236 00:11:51,120 --> 00:11:54,880 Speaker 5: credit perspective, but if there's no deal activity, you really 237 00:11:54,960 --> 00:11:56,040 Speaker 5: can't deploy that capital. 238 00:11:56,920 --> 00:12:00,360 Speaker 2: Mark If I can ask you where across credit you 239 00:12:00,440 --> 00:12:05,720 Speaker 2: find more interesting valuations and deals Right now, I know 240 00:12:05,760 --> 00:12:09,040 Speaker 2: that you've been very busy with abs securitization. If you 241 00:12:09,040 --> 00:12:11,080 Speaker 2: could expand a little bit of what that is and 242 00:12:11,120 --> 00:12:13,040 Speaker 2: why you like it and why you're doing so much 243 00:12:13,040 --> 00:12:13,600 Speaker 2: of it lately. 244 00:12:14,120 --> 00:12:16,720 Speaker 5: Yeah, Well, I think I break the market into kind 245 00:12:16,720 --> 00:12:17,439 Speaker 5: of two sides. 246 00:12:17,520 --> 00:12:17,600 Speaker 2: Right. 247 00:12:17,679 --> 00:12:20,079 Speaker 5: There's what I think what we've been talking about generally here, 248 00:12:20,360 --> 00:12:23,280 Speaker 5: which is what I would characterize is leverage credit. And 249 00:12:23,320 --> 00:12:26,120 Speaker 5: I think of leverage credit both being the bank syndicator 250 00:12:26,200 --> 00:12:28,840 Speaker 5: loan market high yield, but also private credit could be 251 00:12:28,840 --> 00:12:31,559 Speaker 5: first lean, could be junior capital as well, and I 252 00:12:31,600 --> 00:12:34,600 Speaker 5: think in that market, you know, I think there's still 253 00:12:34,640 --> 00:12:37,520 Speaker 5: great value in first lean lending on the private credit side. 254 00:12:37,559 --> 00:12:40,000 Speaker 5: As I said, from a risk adjusted perspective, I think 255 00:12:40,080 --> 00:12:44,960 Speaker 5: that's good value for investors. We also believe that for 256 00:12:45,040 --> 00:12:49,160 Speaker 5: these companies that were that specific vintage of late twenty 257 00:12:49,240 --> 00:12:53,040 Speaker 5: twenty twenty one, great companies there that need some help 258 00:12:53,080 --> 00:12:55,080 Speaker 5: to get to the other side and through that to 259 00:12:55,120 --> 00:12:58,160 Speaker 5: the other side. I mean, you know, of their maturities, 260 00:12:58,200 --> 00:13:01,280 Speaker 5: and they need to do that by lowering their cash burden. 261 00:13:01,760 --> 00:13:05,720 Speaker 5: And we're looking at junior capital or structured praft type 262 00:13:05,760 --> 00:13:08,360 Speaker 5: opportunities that lighten that burden for them so they can 263 00:13:08,400 --> 00:13:10,680 Speaker 5: reinvest in their business, which is really really important for 264 00:13:10,720 --> 00:13:13,680 Speaker 5: them to grow, but also gives them optionality. And we 265 00:13:13,720 --> 00:13:17,080 Speaker 5: think there's some great opportunities there on the leverage side. Then, 266 00:13:17,840 --> 00:13:20,640 Speaker 5: when I look at what's happened in the bank market 267 00:13:20,679 --> 00:13:25,959 Speaker 5: in particular with the Basle three endgame as it's called 268 00:13:26,280 --> 00:13:29,840 Speaker 5: coming to a head here, banks in the US in 269 00:13:29,880 --> 00:13:33,480 Speaker 5: particular are managing down their risk weighted assets and that 270 00:13:33,640 --> 00:13:38,240 Speaker 5: is creating a deluge of opportunities for us on what 271 00:13:38,280 --> 00:13:42,040 Speaker 5: I would call the ig or investment grade private credit side. 272 00:13:42,120 --> 00:13:44,440 Speaker 5: And it's not just us, obviously, our peers are taking 273 00:13:44,440 --> 00:13:47,160 Speaker 5: advantage of that as well. And it is really the 274 00:13:47,160 --> 00:13:50,080 Speaker 5: first time in thirty three years of my history that 275 00:13:50,160 --> 00:13:54,080 Speaker 5: I've actually seen an active flow of deals coming out 276 00:13:54,120 --> 00:13:58,960 Speaker 5: of banks in a very steady, steady manner as opposed 277 00:13:59,000 --> 00:14:01,200 Speaker 5: to very episodic. I think that will can as a 278 00:14:01,240 --> 00:14:04,440 Speaker 5: secular change as opposed to cyclical, and I think you'll 279 00:14:04,440 --> 00:14:07,720 Speaker 5: continue to see that both from banks and non bank 280 00:14:07,760 --> 00:14:10,960 Speaker 5: financial institutions who need to keep up that flow on 281 00:14:11,080 --> 00:14:14,439 Speaker 5: pooled assets that they would normally hold on their balance sheets. 282 00:14:14,480 --> 00:14:16,440 Speaker 3: But can't because of regulatory concerns now. 283 00:14:17,080 --> 00:14:19,480 Speaker 1: But it basically turns up for the listeners out there 284 00:14:19,520 --> 00:14:21,400 Speaker 1: that aren't familiar with this. I mean, when you say 285 00:14:21,400 --> 00:14:23,880 Speaker 1: banks and this flow that you've not seen in thirty 286 00:14:23,920 --> 00:14:26,080 Speaker 1: three years, what is it they're just offloading loans because 287 00:14:26,080 --> 00:14:28,800 Speaker 1: they don't they're not performing or what they're getten down? 288 00:14:29,080 --> 00:14:31,400 Speaker 5: Yeah, that's a great question, and I understand it's not 289 00:14:31,480 --> 00:14:34,360 Speaker 5: so much what I would call the leverage loans that 290 00:14:34,360 --> 00:14:36,280 Speaker 5: you would typically think of. I mean, they haven't really 291 00:14:36,280 --> 00:14:38,760 Speaker 5: held those for years. They've always been a distributor of that. 292 00:14:39,080 --> 00:14:43,640 Speaker 5: But what I'm more getting to are pooled homogenious loans, 293 00:14:44,000 --> 00:14:48,320 Speaker 5: whether that be credit card loans, whether that be student loans, 294 00:14:48,680 --> 00:14:53,280 Speaker 5: it could be residential mortgage loans, it could be you know, 295 00:14:53,640 --> 00:14:57,440 Speaker 5: we do manufactured housing loans. So it's anything where there's 296 00:14:57,480 --> 00:15:02,040 Speaker 5: a pool of homogeneous credit that you can basically securitize. 297 00:15:02,440 --> 00:15:05,040 Speaker 3: And you know, insurance companies can hold the. 298 00:15:04,960 --> 00:15:08,400 Speaker 5: Bulk of those assets because they're raided, and then the 299 00:15:08,480 --> 00:15:11,600 Speaker 5: more junior pieces are held by investors or funds that 300 00:15:11,680 --> 00:15:13,920 Speaker 5: are looking for like you know, mid to high double 301 00:15:13,920 --> 00:15:17,120 Speaker 5: digit typeer terms. So there is a large number of 302 00:15:17,120 --> 00:15:22,440 Speaker 5: those those transactions you've seen you know, we've done transactions 303 00:15:22,440 --> 00:15:27,920 Speaker 5: in the manufactured housing space. You've yeah, we've done healthcare receivables. 304 00:15:28,840 --> 00:15:33,120 Speaker 5: You've seen some of the of the regional banks lighten 305 00:15:33,240 --> 00:15:36,920 Speaker 5: up on some of their real estate, mostly REZI type loans, 306 00:15:37,080 --> 00:15:38,680 Speaker 5: and I think you're going to continue to see more 307 00:15:38,680 --> 00:15:41,600 Speaker 5: of that, and it's providing great opportunity because right now 308 00:15:41,640 --> 00:15:44,720 Speaker 5: it feels like there's more opportunity than capital and that's 309 00:15:44,720 --> 00:15:45,520 Speaker 5: a good place to be. 310 00:15:46,080 --> 00:15:48,680 Speaker 1: But the banks not just dumping these things because they're 311 00:15:49,120 --> 00:15:52,640 Speaker 1: destroyed the bank, you know, the distressed, they're in trouble. 312 00:15:52,640 --> 00:15:54,920 Speaker 1: They're getting them off their books for regulatory reasons. They 313 00:15:54,920 --> 00:15:57,120 Speaker 1: need to do something more technical in terms of their 314 00:15:57,120 --> 00:15:57,800 Speaker 1: own bound sheet. 315 00:15:57,800 --> 00:16:00,640 Speaker 3: Not yeah, absolutely, I mean basically simple terms. 316 00:16:00,680 --> 00:16:03,520 Speaker 5: It's they have to increase their capital buffers, if you will, 317 00:16:04,120 --> 00:16:07,120 Speaker 5: from a regulatory perspective, and it's making it it's making 318 00:16:07,160 --> 00:16:10,040 Speaker 5: it more expensive for them to hold those assets on 319 00:16:10,120 --> 00:16:10,720 Speaker 5: balance sheet. 320 00:16:10,800 --> 00:16:12,240 Speaker 3: So they need to lighten up some of that. 321 00:16:12,720 --> 00:16:16,520 Speaker 1: Okay, So repackaging those loans, you know, to companies or 322 00:16:16,560 --> 00:16:19,800 Speaker 1: students or even people buying solar panels or doing energy 323 00:16:19,800 --> 00:16:24,800 Speaker 1: efficient stuff. I mean that sounds interesting some people that 324 00:16:24,960 --> 00:16:28,200 Speaker 1: may not be following this as closely. Remember that, you know, 325 00:16:28,320 --> 00:16:30,480 Speaker 1: abs structured finance, all that stuff got us into a 326 00:16:30,480 --> 00:16:34,280 Speaker 1: lot of trouble about fifteen years ago. Is this the 327 00:16:34,360 --> 00:16:38,680 Speaker 1: kind of is this different now? And also what are 328 00:16:38,760 --> 00:16:41,240 Speaker 1: returns like there? Because you know, you can basically buy 329 00:16:41,280 --> 00:16:43,520 Speaker 1: a high grade bond with you know, six percent yield, 330 00:16:43,560 --> 00:16:46,440 Speaker 1: which is pretty generous compared to history. Why do you 331 00:16:46,480 --> 00:16:48,480 Speaker 1: need to get exotic? Why do you need to get 332 00:16:48,720 --> 00:16:51,080 Speaker 1: complicated with with structured finance right now? 333 00:16:51,440 --> 00:16:54,640 Speaker 3: Yeah, well it's a it's again a good question. I think. 334 00:16:54,920 --> 00:16:57,280 Speaker 5: You know, we drawed the distinction that if you went 335 00:16:57,360 --> 00:17:00,320 Speaker 5: back to the GFC, I mean, what you had was 336 00:17:00,720 --> 00:17:04,600 Speaker 5: leverage on leverage, right, you had leveraged cash pay products 337 00:17:05,000 --> 00:17:10,159 Speaker 5: that then created derivative products, that created derivative products. So 338 00:17:10,160 --> 00:17:13,920 Speaker 5: you actually had leverage on leverage on leverage, and when 339 00:17:13,960 --> 00:17:17,480 Speaker 5: that turned down, that leverage kills, right. 340 00:17:17,640 --> 00:17:20,040 Speaker 3: So that's different than what we have here. 341 00:17:20,080 --> 00:17:22,480 Speaker 5: What we're talking about is what a normal bank would 342 00:17:22,480 --> 00:17:24,960 Speaker 5: do anyways, is they would take down a. 343 00:17:24,880 --> 00:17:25,960 Speaker 3: Pool of. 344 00:17:27,400 --> 00:17:30,520 Speaker 5: You know, let's call it health medical health care loans. 345 00:17:30,600 --> 00:17:33,400 Speaker 5: Let's say they would put them in a pool, they 346 00:17:33,440 --> 00:17:36,879 Speaker 5: would trunch them out. Versus you know, triple A, double 347 00:17:36,880 --> 00:17:40,240 Speaker 5: A single B type trenches and a small equity piece 348 00:17:40,760 --> 00:17:42,800 Speaker 5: and in many cases hold them on their balance sheet. 349 00:17:42,840 --> 00:17:45,280 Speaker 5: Today they're not doing that, and that's a business that's 350 00:17:45,280 --> 00:17:49,639 Speaker 5: been around for decades, very very comfortable business. Banks have 351 00:17:49,680 --> 00:17:52,240 Speaker 5: been doing it for decades. So that's different, I think 352 00:17:52,280 --> 00:17:55,600 Speaker 5: from what we saw in the GFC. So that that 353 00:17:55,720 --> 00:17:56,720 Speaker 5: I would say. 354 00:17:56,760 --> 00:17:57,960 Speaker 3: Is number one. 355 00:17:58,040 --> 00:18:02,199 Speaker 5: Number two is because these are privately originated and structured, 356 00:18:02,560 --> 00:18:07,159 Speaker 5: you're creating a premium over investment grade that's in the 357 00:18:07,240 --> 00:18:09,320 Speaker 5: area of one hundred and fifty to two hundred and 358 00:18:09,359 --> 00:18:13,520 Speaker 5: fifty bases points. So if you're managing a portfolio, investment 359 00:18:13,520 --> 00:18:18,000 Speaker 5: grade portfolio and you know, those numbers in terms of 360 00:18:18,040 --> 00:18:20,160 Speaker 5: a premium seem more kin to something we would talk 361 00:18:20,160 --> 00:18:22,159 Speaker 5: about in direct lending. Actually they're in excess of what 362 00:18:22,200 --> 00:18:25,080 Speaker 5: you get in direct lending. Those are very significant premiums 363 00:18:25,080 --> 00:18:28,480 Speaker 5: for insurance companies to hold or even today we're seeing 364 00:18:28,480 --> 00:18:32,040 Speaker 5: more interest from just traditional pension plans who are converting 365 00:18:32,119 --> 00:18:35,240 Speaker 5: some of their more liquid fixed income into these types 366 00:18:35,280 --> 00:18:38,440 Speaker 5: of products because you know, generally you can get incremental 367 00:18:38,440 --> 00:18:41,119 Speaker 5: return and people like you know, there's a question around 368 00:18:41,200 --> 00:18:42,480 Speaker 5: how much value you should put on. 369 00:18:42,400 --> 00:18:46,119 Speaker 1: Liquidity and because you're diversified a your much lower default 370 00:18:46,200 --> 00:18:46,679 Speaker 1: risks up. 371 00:18:47,160 --> 00:18:49,119 Speaker 5: Yeah, I mean you think about you have pools of 372 00:18:49,160 --> 00:18:50,560 Speaker 5: loans that are highly diversified. 373 00:18:51,080 --> 00:18:52,720 Speaker 3: We're we're putting at high levels. 374 00:18:52,840 --> 00:18:55,920 Speaker 5: You know, we're obviously testing them their pools that come 375 00:18:55,960 --> 00:18:58,199 Speaker 5: in over time so we can monitor them, and then 376 00:18:58,200 --> 00:19:00,840 Speaker 5: we're putting you know, experienced loss it's on it as well. 377 00:19:00,920 --> 00:19:04,520 Speaker 5: So yeah, I would say it's very different than what 378 00:19:04,520 --> 00:19:06,320 Speaker 5: we experienced in the GSC. 379 00:19:07,320 --> 00:19:10,800 Speaker 4: Mark. You mentioned how strong corporate balance sheets are headed 380 00:19:10,840 --> 00:19:15,240 Speaker 4: into this year. So outside of this sort of homogeneous 381 00:19:15,480 --> 00:19:20,479 Speaker 4: credit opportunity, when it comes to specific sectors, where are 382 00:19:20,480 --> 00:19:22,880 Speaker 4: you guys putting your money, where do you think there's 383 00:19:22,920 --> 00:19:26,320 Speaker 4: opportunity And what are spots that people should be avoiding. 384 00:19:26,880 --> 00:19:28,360 Speaker 3: Yeah, well, I'll start with avoiding. 385 00:19:28,400 --> 00:19:30,399 Speaker 5: And I know Lisa asking me this all the time, 386 00:19:30,640 --> 00:19:35,360 Speaker 5: but I would say we want to avoid spaces like healthcare, 387 00:19:35,440 --> 00:19:37,800 Speaker 5: not all healthcare, but things like healthcare where you've got 388 00:19:37,800 --> 00:19:42,359 Speaker 5: a capped revenue line, especially in America, but your inflation, 389 00:19:42,520 --> 00:19:45,199 Speaker 5: the inflation is going straight through into wages, and so 390 00:19:45,720 --> 00:19:47,480 Speaker 5: you know you're getting squeezed and you don't have much 391 00:19:47,800 --> 00:19:51,920 Speaker 5: control on the revenue line. Because you're dealing with governments 392 00:19:51,960 --> 00:19:56,199 Speaker 5: basically things like commodity based companies, so oil and gas companies, 393 00:19:56,200 --> 00:19:59,600 Speaker 5: where we have zero control or idea as to where 394 00:20:00,000 --> 00:20:03,399 Speaker 5: the revenue line is going from an oil companies perspective, 395 00:20:03,640 --> 00:20:07,600 Speaker 5: and again you're relying on managing costs, if you will. 396 00:20:07,680 --> 00:20:09,240 Speaker 5: Ultimate at the end of the day, I think those 397 00:20:09,280 --> 00:20:11,920 Speaker 5: are just and then the related companies that would be 398 00:20:11,960 --> 00:20:14,679 Speaker 5: around it, like oil field service companies, et cetera. I 399 00:20:14,680 --> 00:20:17,360 Speaker 5: think those would just be hard for us to get 400 00:20:17,359 --> 00:20:21,840 Speaker 5: our heads around from an investment perspective. So away from that, 401 00:20:22,119 --> 00:20:24,919 Speaker 5: I think, you know, where do we see great value? 402 00:20:25,960 --> 00:20:29,040 Speaker 5: I mean, there has been a proliferation of like healthcare 403 00:20:29,119 --> 00:20:32,960 Speaker 5: and software in the past three years in leverage credit, 404 00:20:33,520 --> 00:20:35,919 Speaker 5: and I think there's some great opportunities still in the 405 00:20:35,960 --> 00:20:37,360 Speaker 5: software tech space. 406 00:20:38,040 --> 00:20:39,879 Speaker 3: But again it's it's case by case. 407 00:20:40,359 --> 00:20:43,639 Speaker 5: We think there's you know, great opportunities in the business 408 00:20:43,640 --> 00:20:44,359 Speaker 5: service space. 409 00:20:45,200 --> 00:20:46,159 Speaker 3: I think we would. 410 00:20:45,880 --> 00:20:49,600 Speaker 5: Stay away or be very leery of consumer discretionary at 411 00:20:49,600 --> 00:20:52,439 Speaker 5: this point in time. I think we've We've also found 412 00:20:52,520 --> 00:20:58,240 Speaker 5: that complexities around the geopolitical situation have caused the distribution 413 00:20:58,359 --> 00:21:01,040 Speaker 5: models so very careful around those types of investments. So 414 00:21:01,080 --> 00:21:05,080 Speaker 5: I think it's more of the things that were avoiding 415 00:21:05,320 --> 00:21:07,440 Speaker 5: or very Leiria as opposed to here we think is 416 00:21:07,480 --> 00:21:10,560 Speaker 5: great value because we think, remember, we're trying to generate 417 00:21:10,840 --> 00:21:14,879 Speaker 5: well diversified portfolios of credits that provide a stable and 418 00:21:14,920 --> 00:21:17,880 Speaker 5: persistent returning through cycles. So we never want to be 419 00:21:18,280 --> 00:21:23,800 Speaker 5: weighted to like we were very careful coming through twenty 420 00:21:23,840 --> 00:21:26,840 Speaker 5: one twenty two in terms of our waiting on healthcare 421 00:21:27,480 --> 00:21:31,040 Speaker 5: and software and to the point that we weren't overweight 422 00:21:31,119 --> 00:21:33,240 Speaker 5: that relative to the amount of flow. 423 00:21:33,320 --> 00:21:35,879 Speaker 3: So we're trying to have diversified portfolios for investors. 424 00:21:36,280 --> 00:21:40,040 Speaker 2: So Mark, if I can shift your thoughts to around 425 00:21:40,080 --> 00:21:43,080 Speaker 2: the globe, US looks I mean you look at the 426 00:21:43,200 --> 00:21:46,560 Speaker 2: US economy, it looks really strong. If you look at Europe, 427 00:21:46,640 --> 00:21:49,320 Speaker 2: a lot of people like it for diversity, and the 428 00:21:49,440 --> 00:21:54,320 Speaker 2: valuation looks better. Asia there's not as crowded. When you 429 00:21:54,359 --> 00:21:56,679 Speaker 2: look across the globe, What do you like and for 430 00:21:56,760 --> 00:21:57,280 Speaker 2: what reason? 431 00:21:58,040 --> 00:22:03,919 Speaker 5: Yeah, well, I would focus on US or North America 432 00:22:03,960 --> 00:22:07,679 Speaker 5: if you will, because some opportunities in Canada in Europe 433 00:22:07,840 --> 00:22:13,080 Speaker 5: in particular on a relative value perspective. Because in Asia, 434 00:22:13,280 --> 00:22:16,560 Speaker 5: where I've invested in the past and we invest occasionally, 435 00:22:17,160 --> 00:22:21,040 Speaker 5: it's very challenging in those markets because you are to 436 00:22:21,160 --> 00:22:24,679 Speaker 5: some degree taking on equity like risk given you know, 437 00:22:24,880 --> 00:22:29,240 Speaker 5: the basically the bankruptcy rules or lack thereof in those countries. 438 00:22:29,640 --> 00:22:32,920 Speaker 5: And so we're really focused on countries where you have 439 00:22:33,640 --> 00:22:37,760 Speaker 5: you know, Anglo type bankruptcy and property right rules that 440 00:22:37,880 --> 00:22:40,040 Speaker 5: allow us to actually get our hands on collateral. So 441 00:22:40,400 --> 00:22:43,360 Speaker 5: let's start there, and I think on a risk adjusted basis, 442 00:22:43,840 --> 00:22:46,679 Speaker 5: Europe in the US provide the best return the right Now, 443 00:22:46,680 --> 00:22:49,320 Speaker 5: look in your portfolio just as a caveat, you may 444 00:22:49,359 --> 00:22:52,760 Speaker 5: want to have that Asia exposure, and I think, you 445 00:22:52,800 --> 00:22:55,520 Speaker 5: know my prior life at CPPIB, you know, we would 446 00:22:55,560 --> 00:22:57,959 Speaker 5: make sure that we had a well diversify global portfolio. 447 00:22:58,240 --> 00:23:00,239 Speaker 5: But I'm just talking about where we think we our 448 00:23:00,280 --> 00:23:03,680 Speaker 5: skill set lives, and I think that you know, when 449 00:23:03,720 --> 00:23:07,200 Speaker 5: you look in the US, it's both sponsored type deals 450 00:23:07,320 --> 00:23:09,720 Speaker 5: that are happening and some of these deals that I 451 00:23:09,760 --> 00:23:13,000 Speaker 5: talked about that happened in twenty you know, late twenty 452 00:23:13,040 --> 00:23:16,720 Speaker 5: twenty one, we're working on those. And then in Europe 453 00:23:16,920 --> 00:23:20,119 Speaker 5: because you have a much more disparate, fragmented financial market there, 454 00:23:20,920 --> 00:23:23,280 Speaker 5: those markets always take longer to heal and they're suffering 455 00:23:23,280 --> 00:23:26,399 Speaker 5: from all the same issues that the US banks are 456 00:23:26,400 --> 00:23:29,359 Speaker 5: suffering from, and it's more acute because the market's not 457 00:23:29,400 --> 00:23:32,160 Speaker 5: as big. Individual markets are smaller, and so we think 458 00:23:32,640 --> 00:23:37,880 Speaker 5: there's good opportunities in both mostly sponsor and unsponsored non 459 00:23:37,920 --> 00:23:41,480 Speaker 5: sponsored deals in the US. And we're finding a lot 460 00:23:41,520 --> 00:23:45,280 Speaker 5: of family owned non sponsor businesses in Europe have been 461 00:23:45,359 --> 00:23:48,520 Speaker 5: left behind by the banking system in terms of helping 462 00:23:48,520 --> 00:23:51,080 Speaker 5: them grow, and you know, we think frankly there's a 463 00:23:51,080 --> 00:23:52,520 Speaker 5: lot of great opportunities there as well. 464 00:23:53,400 --> 00:23:55,320 Speaker 1: When you look at China, mort though it's done the 465 00:23:55,320 --> 00:23:58,119 Speaker 1: best in leverage finances, yeah, you know, maybe it's just 466 00:23:58,200 --> 00:24:00,600 Speaker 1: bouncing back off the lows because it really it struggled 467 00:24:00,680 --> 00:24:02,960 Speaker 1: last year, but a lot of the investors we taught 468 00:24:03,000 --> 00:24:05,399 Speaker 1: to say it's uninvestable. Do you have any thoughts on 469 00:24:05,520 --> 00:24:08,280 Speaker 1: China as a market for a fixed income investor? 470 00:24:09,880 --> 00:24:12,480 Speaker 5: Yeah, I mean we, you know, on the private equity side, 471 00:24:12,480 --> 00:24:15,920 Speaker 5: we have, We've had a long standing relationship of investing 472 00:24:15,960 --> 00:24:18,560 Speaker 5: in China, and I think from that perspective we still 473 00:24:18,600 --> 00:24:21,919 Speaker 5: find that to be good value. I think on the 474 00:24:21,960 --> 00:24:26,040 Speaker 5: credit side, back to my original point is it's you 475 00:24:26,080 --> 00:24:29,000 Speaker 5: know a lot of the historic deals that were done 476 00:24:29,119 --> 00:24:32,800 Speaker 5: were based on collateral that was outside of China to 477 00:24:32,840 --> 00:24:36,520 Speaker 5: make loans into China, and that's you know, become challenging. 478 00:24:37,080 --> 00:24:42,120 Speaker 5: The ability to do investments directly into China make it complicated, 479 00:24:42,200 --> 00:24:45,000 Speaker 5: and it's it's really become complicated by the by the 480 00:24:45,040 --> 00:24:48,600 Speaker 5: broader political situation there as well. I think at another 481 00:24:48,640 --> 00:24:51,200 Speaker 5: place we over time will find interesting. We spent time 482 00:24:51,240 --> 00:24:54,160 Speaker 5: looking at is India. Uh and again that's another place 483 00:24:54,200 --> 00:24:56,400 Speaker 5: where we've led with the on the private equity side. 484 00:24:56,400 --> 00:24:57,919 Speaker 3: We've done it exteeingly. 485 00:24:57,400 --> 00:25:00,000 Speaker 5: Well there from an investment perspective, and we think as 486 00:25:00,040 --> 00:25:03,000 Speaker 5: that market evolves even more, which it seems to be 487 00:25:03,520 --> 00:25:06,720 Speaker 5: under the current regime, then that's probably a very good 488 00:25:06,760 --> 00:25:09,760 Speaker 5: market to look at. But generally, given who we are 489 00:25:09,800 --> 00:25:13,280 Speaker 5: as an organization that looks at a global perspective and 490 00:25:13,400 --> 00:25:17,800 Speaker 5: a very large LPs and investors, that we want to 491 00:25:17,840 --> 00:25:20,440 Speaker 5: go where the bigger markets are. So India and China 492 00:25:20,480 --> 00:25:25,400 Speaker 5: are clearly the bigger markets in Asia, and we will 493 00:25:25,400 --> 00:25:27,960 Speaker 5: focus mostly on India. 494 00:25:28,000 --> 00:25:29,600 Speaker 3: If you will go forward and. 495 00:25:29,560 --> 00:25:33,320 Speaker 4: Mark if we can go back to your bottoms up approach. 496 00:25:33,359 --> 00:25:34,880 Speaker 4: I think a lot of people listening to this would 497 00:25:34,960 --> 00:25:37,640 Speaker 4: love to ride the back of smart money. So maybe 498 00:25:37,680 --> 00:25:40,040 Speaker 4: we can just dig in a little bit deeper. You know, 499 00:25:40,040 --> 00:25:43,000 Speaker 4: it's interesting you mentioned software, you didn't use the words AI, 500 00:25:44,119 --> 00:25:45,919 Speaker 4: and it appears like the Max seven have really been 501 00:25:45,960 --> 00:25:48,000 Speaker 4: the ones that have been able to benefit the most 502 00:25:48,359 --> 00:25:51,439 Speaker 4: from an anticipated AI boom. How do you play it 503 00:25:51,640 --> 00:25:55,280 Speaker 4: from a credit perspective? Is there enough to invest in 504 00:25:55,320 --> 00:25:58,400 Speaker 4: at this point to take advantage of where there may 505 00:25:58,440 --> 00:26:00,720 Speaker 4: be a boom or are you even being a boom? 506 00:26:01,080 --> 00:26:01,320 Speaker 2: Yeah? 507 00:26:01,359 --> 00:26:05,359 Speaker 5: I think we look at AI well. First of all, thanks, 508 00:26:05,400 --> 00:26:08,119 Speaker 5: I appreciate you thinking that we've got some special sauce 509 00:26:08,119 --> 00:26:09,880 Speaker 5: here to think about it. But I would say that 510 00:26:10,520 --> 00:26:12,439 Speaker 5: the one thing I know about AI right now, and 511 00:26:12,480 --> 00:26:13,880 Speaker 5: I don't know if you know this, is we're one 512 00:26:13,920 --> 00:26:18,560 Speaker 5: of twenty firms that have access to chat GPT enterprise, 513 00:26:19,480 --> 00:26:22,719 Speaker 5: So we're using that internally at Carlisle right now and 514 00:26:22,760 --> 00:26:25,600 Speaker 5: it's helping, I would say, mostly from an efficiency perspective, 515 00:26:25,680 --> 00:26:29,600 Speaker 5: but also we're testing it on investment making decisions as well, 516 00:26:29,800 --> 00:26:32,080 Speaker 5: and carefully so because you know, we're still humans and 517 00:26:32,080 --> 00:26:35,320 Speaker 5: we think that that human overlay probably still counts for 518 00:26:35,400 --> 00:26:38,960 Speaker 5: something to make money if you will investing in credit 519 00:26:39,080 --> 00:26:39,680 Speaker 5: on it right now. 520 00:26:40,119 --> 00:26:41,880 Speaker 3: I would always say something that's. 521 00:26:41,680 --> 00:26:43,919 Speaker 5: In the early stages and the earth like you know, 522 00:26:43,960 --> 00:26:46,280 Speaker 5: you were on the early part of the frontier here. 523 00:26:46,680 --> 00:26:49,000 Speaker 5: It's very hard for us to get comfort in that 524 00:26:49,200 --> 00:26:51,280 Speaker 5: because we think a lot of money is going to 525 00:26:51,320 --> 00:26:53,359 Speaker 5: be spent, and we are seeing a lot of money 526 00:26:53,359 --> 00:26:58,800 Speaker 5: being spent by the various participants, including open AI with 527 00:26:58,880 --> 00:27:03,000 Speaker 5: respect to building out the infrastructure, computing power, et cetera. 528 00:27:03,480 --> 00:27:07,639 Speaker 5: And until there's like a discernible pathway to revenue and 529 00:27:07,680 --> 00:27:10,080 Speaker 5: cash flows, as a credit investor, it's really hard to make. 530 00:27:10,160 --> 00:27:12,119 Speaker 5: So I think our approach is how do we use 531 00:27:12,119 --> 00:27:13,760 Speaker 5: it to make it more efficient, how do we use 532 00:27:13,760 --> 00:27:18,720 Speaker 5: it to make us more better investment, make better investment decisions, 533 00:27:18,960 --> 00:27:21,680 Speaker 5: and deliver better outcomes. That's really our focus right now. 534 00:27:22,000 --> 00:27:25,720 Speaker 5: But I think you play it through maybe the infrastructure. 535 00:27:25,800 --> 00:27:28,800 Speaker 5: So we have done investments where people are building out 536 00:27:29,240 --> 00:27:32,720 Speaker 5: data centers, and we have made loans against chips, if 537 00:27:32,760 --> 00:27:34,920 Speaker 5: you will, So that's one way to play it. But 538 00:27:34,960 --> 00:27:37,920 Speaker 5: there's so much value and then underlying collateral for instance, 539 00:27:38,400 --> 00:27:40,280 Speaker 5: that we can get comfortable. So it's back to the 540 00:27:40,280 --> 00:27:43,520 Speaker 5: basics of credit is where's the cash flow or where's 541 00:27:43,520 --> 00:27:46,480 Speaker 5: your underlying collateral value and if you can put your 542 00:27:46,480 --> 00:27:48,520 Speaker 5: hands on it, and you can sell it to somebody 543 00:27:48,560 --> 00:27:50,600 Speaker 5: in a downside scenario, then we're going to approach it. 544 00:27:50,640 --> 00:27:53,320 Speaker 5: So we think there are those opportunities, but they aren't 545 00:27:53,560 --> 00:27:58,120 Speaker 5: directly on the engine of AI. It's really the infrastructure 546 00:27:58,119 --> 00:28:00,399 Speaker 5: of AI that we would look to support build out. 547 00:28:00,400 --> 00:28:01,960 Speaker 5: And we think there's a lot of opportunities there and 548 00:28:01,960 --> 00:28:03,639 Speaker 5: we're going to continue to focus on that. 549 00:28:04,119 --> 00:28:06,960 Speaker 4: And what about spots like, uh, you know, foundaries, you know, 550 00:28:07,040 --> 00:28:10,359 Speaker 4: chip manufacturing costs billions and billions, is that you know? 551 00:28:10,440 --> 00:28:12,800 Speaker 4: And and the largest players out there, like the Intel's 552 00:28:13,040 --> 00:28:16,520 Speaker 4: are looking for outside money. Is that a spot that 553 00:28:16,560 --> 00:28:17,600 Speaker 4: you're interested in? It able? 554 00:28:18,119 --> 00:28:20,239 Speaker 5: I yeah, I would say we're more interested in the 555 00:28:20,320 --> 00:28:24,280 Speaker 5: chips as opposed to the actual you know, facilities themselves, 556 00:28:24,480 --> 00:28:27,560 Speaker 5: because you know, you don't want to take massive single. 557 00:28:27,280 --> 00:28:28,480 Speaker 3: Asset risk, if you will. 558 00:28:28,560 --> 00:28:31,000 Speaker 5: But look, we would look at anything, and I think 559 00:28:31,000 --> 00:28:33,920 Speaker 5: we're early on in what those opportunities look like because 560 00:28:34,040 --> 00:28:36,880 Speaker 5: I think what you're pointing out in particular, is there 561 00:28:37,119 --> 00:28:43,000 Speaker 5: so much capital being deployed in developing these AI systems. 562 00:28:43,640 --> 00:28:46,520 Speaker 5: Anytime there's a large amount of capital expenditures, that somewhere 563 00:28:46,520 --> 00:28:49,000 Speaker 5: where credit ultimately would go. So think if the structure 564 00:28:49,000 --> 00:28:51,920 Speaker 5: for instance, infrastructure, we have infrastructure credit. We focus on 565 00:28:52,000 --> 00:28:54,440 Speaker 5: that because we know there's trillions of dollars being deployed 566 00:28:54,440 --> 00:28:57,000 Speaker 5: in the energy transition. I think you're pointing out exactly 567 00:28:57,080 --> 00:28:59,800 Speaker 5: what our thesis is is that there'll be billions and 568 00:29:00,040 --> 00:29:03,360 Speaker 5: billions of dollars deployed in this space, maybe trillions, and 569 00:29:03,440 --> 00:29:05,400 Speaker 5: we're going to try to figure out the areas that 570 00:29:05,480 --> 00:29:07,200 Speaker 5: make the most sense from a credit perspective. 571 00:29:07,640 --> 00:29:10,520 Speaker 2: So Mark, at your level at global head of credit, 572 00:29:10,560 --> 00:29:15,240 Speaker 2: you're also stearheading and helping along with fundraising. And I 573 00:29:15,280 --> 00:29:18,960 Speaker 2: heard it's a challenging fundraising environment right now, although it 574 00:29:19,000 --> 00:29:22,480 Speaker 2: helps to have a big, big brand name. Where where 575 00:29:22,480 --> 00:29:25,160 Speaker 2: are your biggest what's the first port of call where 576 00:29:25,280 --> 00:29:29,040 Speaker 2: you're taking the most flights to right now? What area, region, 577 00:29:29,080 --> 00:29:30,200 Speaker 2: what kind of LPs? 578 00:29:30,760 --> 00:29:33,720 Speaker 5: Yeah, well, Lisa, I would say fundraising is always hard. 579 00:29:33,760 --> 00:29:36,080 Speaker 5: It's never I've never I've never done it when it's 580 00:29:36,120 --> 00:29:38,400 Speaker 5: been easy. But if they ever got easy, that would 581 00:29:38,400 --> 00:29:42,360 Speaker 5: be a pleasure. You know, you have to go where 582 00:29:43,240 --> 00:29:46,000 Speaker 5: you know, you go where the capital is to be deployed, 583 00:29:46,000 --> 00:29:49,080 Speaker 5: and people want to reinvest in. Right now, we're seeing 584 00:29:49,280 --> 00:29:52,480 Speaker 5: a large amount of capital being redeployed out of the 585 00:29:52,520 --> 00:29:55,959 Speaker 5: Middle East. But you know, they're also reinvesting in their 586 00:29:56,000 --> 00:29:58,200 Speaker 5: own in their own countries as well, but they're looking 587 00:29:58,200 --> 00:30:00,520 Speaker 5: for partners and managers that can help them. I think 588 00:30:00,560 --> 00:30:06,120 Speaker 5: they're far more strategic and forward looking in terms of partners, 589 00:30:06,120 --> 00:30:08,920 Speaker 5: So I think they're different relationships than some of the 590 00:30:08,960 --> 00:30:11,240 Speaker 5: traditional pension plans that we've dealt with in the past. 591 00:30:11,280 --> 00:30:14,920 Speaker 5: And they're smart and sophisticated investors, so that makes it 592 00:30:15,360 --> 00:30:16,240 Speaker 5: interesting for us. 593 00:30:16,280 --> 00:30:18,760 Speaker 3: So our models have evolved there, if you will. 594 00:30:19,640 --> 00:30:23,400 Speaker 5: Asia is another place where you know, depending on pockets, 595 00:30:23,520 --> 00:30:25,640 Speaker 5: and you know, some of that is just not institutional, 596 00:30:25,760 --> 00:30:28,160 Speaker 5: some of it's you know, high net worth as well, 597 00:30:28,800 --> 00:30:33,160 Speaker 5: and you know, as a rising economy and a rising 598 00:30:33,320 --> 00:30:37,160 Speaker 5: population in terms of wealth, you're seeing that wealth's come 599 00:30:37,160 --> 00:30:38,840 Speaker 5: out of Asia as well. So I think those are 600 00:30:38,920 --> 00:30:40,600 Speaker 5: kind of the two prime If you said, where am 601 00:30:40,640 --> 00:30:42,200 Speaker 5: I spending a lot of time and flying to, I 602 00:30:42,200 --> 00:30:45,400 Speaker 5: think those two regions are are I've been more often 603 00:30:45,960 --> 00:30:48,160 Speaker 5: than not in the past eighteen. 604 00:30:47,800 --> 00:30:48,280 Speaker 3: Months or so. 605 00:30:49,600 --> 00:30:52,320 Speaker 1: And as you rightly pointed out Mark earlier, credit is 606 00:30:52,320 --> 00:30:56,880 Speaker 1: all about relative value from your unique global perspective, Where 607 00:30:56,920 --> 00:30:58,960 Speaker 1: do you see the best relative value right now? 608 00:31:00,040 --> 00:31:03,000 Speaker 3: Yeah, that's it. It's a really really good question. 609 00:31:03,200 --> 00:31:08,440 Speaker 5: I would point out that there's great relative value in 610 00:31:08,840 --> 00:31:13,040 Speaker 5: single name corporate right now on both the first lean 611 00:31:13,600 --> 00:31:17,240 Speaker 5: and really some of these junior some of these junior pieces. 612 00:31:17,920 --> 00:31:22,400 Speaker 5: I would also point out that given the supply demand 613 00:31:22,440 --> 00:31:28,280 Speaker 5: imbalance right now on ig private credit, that there's some 614 00:31:28,360 --> 00:31:32,280 Speaker 5: tremendous returns being made on the residual pieces there that 615 00:31:32,360 --> 00:31:36,200 Speaker 5: are like you know, I'm talking equity type returns that 616 00:31:36,240 --> 00:31:39,680 Speaker 5: are in some cases north is the twenty percent. And 617 00:31:39,720 --> 00:31:42,280 Speaker 5: then I guess the final piece I would point to 618 00:31:42,440 --> 00:31:45,160 Speaker 5: is in the COLO market right now. I think a 619 00:31:45,240 --> 00:31:47,560 Speaker 5: very attractive place to be is the triple B double 620 00:31:47,560 --> 00:31:48,920 Speaker 5: B tranches right now as well. 621 00:31:50,040 --> 00:31:52,440 Speaker 1: So just to because the residuals on an ig loan 622 00:31:52,600 --> 00:31:54,280 Speaker 1: does what does that actually entail? 623 00:31:55,560 --> 00:31:58,480 Speaker 5: Well, think of it in a securitization structure that it 624 00:31:58,520 --> 00:32:01,720 Speaker 5: would be the most junior or junior note if you will, 625 00:32:02,400 --> 00:32:05,400 Speaker 5: of that capital structure, which could be anywhere from five 626 00:32:05,440 --> 00:32:08,240 Speaker 5: to ten percent of that of that structure. 627 00:32:08,080 --> 00:32:09,840 Speaker 1: And you can get twenty percent on that right now 628 00:32:09,920 --> 00:32:10,680 Speaker 1: for an IG name. 629 00:32:11,120 --> 00:32:13,280 Speaker 5: You know, it depends on the asset class, it depends 630 00:32:13,320 --> 00:32:16,600 Speaker 5: on the structure, etc. But yeah, in many cases we're 631 00:32:16,640 --> 00:32:18,719 Speaker 5: looking at, you know, some returns that are in that 632 00:32:18,760 --> 00:32:20,280 Speaker 5: type of area. 633 00:32:19,840 --> 00:32:20,960 Speaker 1: In the US or do you have to go to 634 00:32:21,000 --> 00:32:21,800 Speaker 1: emerging markets? 635 00:32:21,920 --> 00:32:24,800 Speaker 3: No, in the US, in the safe market. 636 00:32:25,440 --> 00:32:28,160 Speaker 1: Okay, And as also you rightly pointed out earlier, we 637 00:32:28,160 --> 00:32:29,960 Speaker 1: should worry because we are credit people. What do you 638 00:32:30,000 --> 00:32:32,640 Speaker 1: most worry about right now for the next twelve months? 639 00:32:32,920 --> 00:32:35,360 Speaker 5: You know what, there's a lot of people ask that, 640 00:32:35,640 --> 00:32:39,200 Speaker 5: and I'll tell you what my biggest worry is is 641 00:32:39,240 --> 00:32:45,239 Speaker 5: an unforeseen geopolitical event that causes the major disruption in 642 00:32:45,600 --> 00:32:47,240 Speaker 5: the functioning of the markets. 643 00:32:47,720 --> 00:32:49,600 Speaker 3: And what could that be? 644 00:32:49,760 --> 00:32:53,080 Speaker 5: I mean, nobody could have envisioned the Russian invasion of 645 00:32:53,120 --> 00:32:56,320 Speaker 5: the Ukraine, or at least we couldn't, and that had a 646 00:32:56,520 --> 00:33:01,280 Speaker 5: major dampening an impact in the marketplace, I guess also 647 00:33:01,320 --> 00:33:06,520 Speaker 5: another global pandemic of some sort. I mean, those type 648 00:33:06,520 --> 00:33:09,640 Speaker 5: of events are really are black swan events that have 649 00:33:09,800 --> 00:33:13,120 Speaker 5: material impacts. Now we generally, you know, as an industry, 650 00:33:13,120 --> 00:33:16,800 Speaker 5: I would say survive them. But those are what I 651 00:33:16,840 --> 00:33:20,360 Speaker 5: worry about, and they're very unpredictable. So I think, you know, 652 00:33:20,560 --> 00:33:22,120 Speaker 5: rates are going to go where rates are going to go. 653 00:33:23,120 --> 00:33:24,880 Speaker 5: You know, either we're going to go into a soft 654 00:33:24,960 --> 00:33:28,600 Speaker 5: landing or a recession. I mean, we underwrite those scenarios 655 00:33:28,600 --> 00:33:32,000 Speaker 5: anyways when we underwrite credit. But generally, the best protection 656 00:33:32,080 --> 00:33:34,840 Speaker 5: I've learned in thirty three years is having broadly diversified 657 00:33:34,880 --> 00:33:39,280 Speaker 5: portfolios of higher quality assets. And you know, when I 658 00:33:39,320 --> 00:33:42,880 Speaker 5: think back in times when we get into you know, 659 00:33:42,920 --> 00:33:45,720 Speaker 5: where I think markets are over priced, like twenty nineteen 660 00:33:46,200 --> 00:33:48,360 Speaker 5: where we started pulling back a bit. I think those 661 00:33:48,520 --> 00:33:50,320 Speaker 5: those are points in time where you start to look 662 00:33:50,360 --> 00:33:53,480 Speaker 5: at the quality of assets in your portfolio and see 663 00:33:53,520 --> 00:33:55,880 Speaker 5: what you can rotate out of. And I think, you know, 664 00:33:55,960 --> 00:33:59,640 Speaker 5: right now, things feel okay. I would say I always 665 00:33:59,640 --> 00:34:02,160 Speaker 5: have hesitant to say great, but they feel like okay. 666 00:34:02,560 --> 00:34:05,040 Speaker 5: But I'm cautious about, you know, how far we can 667 00:34:05,120 --> 00:34:08,600 Speaker 5: run from an economic perspective, Like, you know, trees don't 668 00:34:08,600 --> 00:34:10,200 Speaker 5: grow to the sky, so eventually we have to have 669 00:34:10,239 --> 00:34:13,680 Speaker 5: a downturn. And I think, you know, I'm always anticipating 670 00:34:13,760 --> 00:34:15,439 Speaker 5: that we're going to have one at some point in time, 671 00:34:15,480 --> 00:34:17,080 Speaker 5: and we have to prepare ourselves for that. 672 00:34:17,760 --> 00:34:19,600 Speaker 1: Po much a way to state doesn't give you nightmaes. 673 00:34:20,360 --> 00:34:22,719 Speaker 5: You know, commercial real estate, I think it's about one 674 00:34:22,719 --> 00:34:26,600 Speaker 5: point four trillion in the US. I believe regional banks 675 00:34:26,600 --> 00:34:29,200 Speaker 5: hold about forty percent of that. The large money center 676 00:34:29,239 --> 00:34:32,760 Speaker 5: banks are in the teens, like call it fifteen seventeen percent. 677 00:34:34,120 --> 00:34:38,280 Speaker 5: You know, those banks are all very well capitalized. 678 00:34:38,160 --> 00:34:38,319 Speaker 3: And. 679 00:34:39,840 --> 00:34:43,279 Speaker 5: It's it's it's a it's an event where I think 680 00:34:43,280 --> 00:34:45,839 Speaker 5: it'll be like a slow moving car accident. It will 681 00:34:45,880 --> 00:34:49,200 Speaker 5: happen over time, not at one point in time, and 682 00:34:49,960 --> 00:34:52,480 Speaker 5: we're starting to see the early signs of it. But 683 00:34:52,600 --> 00:34:55,719 Speaker 5: I believe the system in the US at least is 684 00:34:57,680 --> 00:35:01,359 Speaker 5: capital buoyant enough if you will pay, and anything that's 685 00:35:01,400 --> 00:35:04,160 Speaker 5: going to happen there, banks are taking provisions and we're 686 00:35:04,200 --> 00:35:05,360 Speaker 5: just going to have to work through it. 687 00:35:06,440 --> 00:35:07,960 Speaker 3: And you know, Lisa and I talked. 688 00:35:07,680 --> 00:35:09,920 Speaker 5: About this, and I'd say this might be more analogous 689 00:35:09,960 --> 00:35:11,920 Speaker 5: to the SNL crisis, if you want to call it 690 00:35:12,000 --> 00:35:16,520 Speaker 5: that that happened over the late the late eighties early nineties, 691 00:35:16,560 --> 00:35:19,480 Speaker 5: where there was a seven year process where these SNL's 692 00:35:19,600 --> 00:35:22,239 Speaker 5: kind of you know, of three thousand, I think a 693 00:35:22,320 --> 00:35:25,000 Speaker 5: thousand of them were impacted, and you know, they're kind 694 00:35:25,000 --> 00:35:27,560 Speaker 5: of going out and being absorbed into the system. 695 00:35:27,960 --> 00:35:29,160 Speaker 3: I believe it'll be more. 696 00:35:29,000 --> 00:35:31,839 Speaker 1: Like that great stuff. Mark Jenkins, Global head of Credit 697 00:35:31,920 --> 00:35:33,879 Speaker 1: at Carlisle great to have you on the Credit Edge. 698 00:35:33,880 --> 00:35:36,879 Speaker 1: Many thanks, James, thanks so much, and many thanks Lisa 699 00:35:36,920 --> 00:35:40,000 Speaker 1: Lee with Bloomberg News in London. Brilliancy again, cheers Yes. 700 00:35:40,640 --> 00:35:43,160 Speaker 1: Read all of Lisa's great scoops on the Bloomberg Terminal 701 00:35:43,200 --> 00:35:46,359 Speaker 1: and of course at Bloomberg dot com. And to Rob 702 00:35:46,360 --> 00:35:48,759 Speaker 1: Schiffman at Boomberg Intelligence, thank you so much for joining us. 703 00:35:48,840 --> 00:35:51,120 Speaker 1: Check out all of Rob's research on the Bloomberg terminal. 704 00:35:51,160 --> 00:35:53,640 Speaker 1: It's great stuff, or contact him directly if you need 705 00:35:53,680 --> 00:35:56,320 Speaker 1: more info. Tech is my life. Call me is the 706 00:35:56,360 --> 00:35:58,000 Speaker 1: first thing you'll see when you look him up on 707 00:35:58,040 --> 00:36:01,040 Speaker 1: the terminal. Thanks again to Mark Jenkins, head of Global 708 00:36:01,040 --> 00:36:03,439 Speaker 1: Credit at Carlisle, and so Lisa Lee from Bloomberg News. 709 00:36:03,480 --> 00:36:06,120 Speaker 1: Please do subscribe wherever you get your podcasts. We're on Apple, 710 00:36:06,160 --> 00:36:09,080 Speaker 1: Google and Spotify. Give us a review, tell your friends 711 00:36:09,160 --> 00:36:12,200 Speaker 1: or email me directly at jcrombieight at Bloomberg dot net. 712 00:36:12,600 --> 00:36:14,719 Speaker 1: I'm James Crombie. It's been a pleasure having you. See 713 00:36:14,719 --> 00:36:17,239 Speaker 1: you next time on the Credit Edge.