Which credit funds going out of business?
Some will undoubtedly be washed out just like we saw in PE in the last few years. I’ll start:
Blue Owl
Ares Junior capital fund
Evolution Credit Partners
Some large lenders to First Brands
A few CLOs with high exposure across bad software loans
What have you guys heard? Who’s screwed and won’t be able to raise a next fund?
Heard White Oak has been struggling
I have seen them be incredibly aggressive of late in closing ABL and equipment financing on things no one would touch. Dont have any insight on existing book though
Agree, they seem to be struggling based on what I’ve seen too
Based on the most helpful WSO content, there isn't a direct mention of specific credit funds going out of business in the provided context. However, the challenges faced by credit funds are highlighted. Many credit funds have struggled due to market conditions, such as being fully invested in bad times or being pulled into bad situations when good opportunities are scarce. For example, funds investing in companies with bad balance sheets during good times (e.g., TXU) instead of waiting for better opportunities (e.g., LyondellBasell) have faced significant hits.
Additionally, the broader market environment has led to difficulties in fundraising and performance, similar to what has been observed in private equity. Smaller funds and those with high exposure to risky assets, like bad software loans or distressed sectors, are likely to face consolidation or closure. However, specific names like Blue Owl, Ares Junior Capital Fund, or Evolution Credit Partners are not explicitly discussed in the context provided.
If you're looking for more detailed insights, it might be worth exploring recent threads or discussions on WSO for updates on struggling credit funds.
Sources: Credit - Pod Shop/MM vs. Distressed/Special Sits HF, Troubled fundraising processes, Q&A: Credit Analyst (Multi-Strat Credit Fund) >$5bn Fund, Credit funds
Jeffries Credit Partners
.
Shit underwriting standards + it's Jeffries
the clo wipeout by itself will be so bad it will cause banks to fail and have them go the way of the subprime cdo.
I think you are confusing sub-par returns as meaning a total loss. Yes, credit firms heavily invested in First Brands especially on the trade financing side of the equation are going to probably dissolve. But it takes a lot for a CLO to implode, especially because it implies a LGD of 100% on 40% or more on the firm's investments for it to affect the AAA tranche. Most CLOs have a bucket capped at say 20% of sector exposure and then another 15% of software exposure spread throughout healthcare IT etc. The one exception might be some of the smaller guys may face outsized losses due to LMEs, but if a AAA CLO tranche fails that's game over for most of the BSL market.
I think private credit is very unappetizing though headed into what might be a potential recession just because if you think about maybe 35% of the firm's investments are in software loans, there's another 20% in business services that tends to be very cyclical and very human capital driven that would likely see a large loss. A lot of guys aren't going to survive if they post a -20% return after a recession.
I think the previous post means CLOs that have an outsized software exposure vs peers and will have much higher funding cost as a result of poor performance / poor equity return. CLOs are a consolidating market, hence those that underperform will not remain stand alone entire
ok but extending that logic to a behemoth like Blue Owl makes no sense.
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