BDC

Private credit returns declined in Q1, but executives blame ‘naysayers’ not fundamentals.

The firm’s chief operating officer told a Moody’s conference, however, that ‘if you need the money to live on, it’s not appropriate’.

Co-chief executives Marc Lipschultz and Doug Ostrover are no longer using company shares as collateral for personal loans.

The manager says redemption gates allow the non-listed fund to ‘preserve portfolio integrity and continue deploying capital’.

Private debt funds face exposure to AI-disrupted industries in approaching 60% of assets, driven by a culture focused on origination rather than portfolio management.

By now there is widespread acknowledgement that something is awry in private credit, both with redemptions in semi-liquid funds and valuations.

Apollo and Ares’ funds join a growing list of funds enforcing redemption limits, seeking to avoid downgrades.

Runs draw down political capital, as examiners step up focus on disclosures, possible conflicts and valuation of funds.

Valuations of Blue Owl’s BDC’s portfolio provided by Kroll have raised concern given Kroll’s close connection to Deerfield, a borrower from those BDCs.

Cliffwater and Morgan Stanley seek to reassure investors over the health of their funds’ portfolios, while JPMorgan limits lending activity to credit funds.