Junk Companies Are in Debt Covenant 'La La Land,' Says Fox Legal
Fox Legal Training sees debt documentation risks rising as too much cash chases a limited number of high-yield deals. “Provisions these days are drafted in a way that they are very much departures from reality,” Sabrina Fox, the company’s founder, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Aidan Cheslin in this episode of the Credit Edge podcast. “That creates an alternate universe, like La La Land, where the numbers don’t match the performance of the business,” says Fox, who specializes in covenant analysis. Fox and Cheslin also discuss lack of transparency in high-yield debt deals, lessons learned from the Altice debt restructuring, how aggressive liability management spreads to Europe from the US and where to spot trouble in prospectuses.See omnystudio.com/listener for privacy information.
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US Billionaires Are Only Just Getting Started on Their Global Sports Invasion
US billionaires and sovereign wealth funds are going to get more active in global sports investing, according to Andalusian Credit Partners. “The US invasion into other markets is just getting started,” Aaron Kless, the US middle-market direct lending platform’s chief executive officer, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Arnold Kakuda in this episode of the Credit Edge podcast. “A lot of the largest sovereign wealth funds are interested in getting deeper into sports investing,” adds Kless, whose firm focuses on sports, media and entertainment. Kless and Kakuda also discuss the next big sports deal, the high cost of being a fan and how not to get trapped in the vanity play.See omnystudio.com/listener for privacy information.
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Private Credit Giant Ares Is Seeing More Defense Opportunities in Europe
Ares Management, the $550 billion alternative investor, expects private lenders to get more involved in funding Europe’s rearmament. “We are starting to see more defense opportunities come across the desk,” Mike Dennis, the company’s co-head of European credit, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Jeroen Julius in this episode of the Credit Edge podcast. “We would tend to be cautious — we need to listen to what our LPs’ appetite for those types of businesses are,” says Dennis, referring to Ares’ limited partners and their environmental, social and governance concerns. Dennis and Julius also discuss middle-market loan pricing, private credit returns and where Ares might look to open up new offices in Europe.See omnystudio.com/listener for privacy information.
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JPMorgan’s Aronov Sees More Junk Firms Struggling to Repay Debts
JPMorgan Asset Management is seeking hedges against credit market losses as risks rise and spreads tighten. “There’s value in shorts and credit protection,” Oksana Aronov, the firm’s head of market strategy for alternative fixed income, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Jody Lurie in the latest Credit Edge podcast. “It is very undervalued today because of the complacency in the market,” says Aronov, referring to the high-grade credit default swap index. Aronov and Lurie also discuss the increasing amount of bond and loan interest being repaid with additional debt, dwindling recovery rates, private debt convergence and high-grade opportunities.See omnystudio.com/listener for privacy information.
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Private Credit Heavyweight HPS Sees ‘Huge Opportunity’ in Fund Finance
HPS Investment Partners is building out its fund finance business, including net-asset-value lending. “It’s a huge opportunity,” Purnima Puri, head of liquid credit and a founding partner at the $150 billion firm, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Tolu Alamutu in the latest Credit Edge podcast. “Exits for private equity sponsors have been somewhat limited and it’s one way to get some capital back to their investor group, which I think is super important,” says Puri. They also discuss how HPS is positioning for stagflation, the private-debt deal pipeline, relative returns, slim recoveries and liability-management exercise “brain damage.”See omnystudio.com/listener for privacy information.
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The Credit Edge reviews the top credit news of the week and looks at the week ahead, with in-depth research of the most important corporate sectors, trends and themes. Analysis of specific corporate bonds and credit default swaps is backed by Bloomberg Intelligence's robust data sets and indexes.
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