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Blue Owl executives mentioned the choice asset supervisor has not seen “any materials pickup in stress” throughout its portfolio in the course of the ‘increased for longer’ charge atmosphere, though it continues to have a small variety of debtors on its watch record.
In an interview with legislation agency Proskauer, Blue Owl vice chairman Erica Wilson and managing director Nicole Drapkin mentioned that the agency continues to see regular top- and bottom-line progress on each a quarter-on-quarter and year-on-year foundation.
“Our debtors had been effectively positioned coming into the previous few years, having efficiently navigated increased rates of interest by rising revenues and profitability, adjusting price constructions and managing money movement and dealing capital the place wanted,” they informed Proskauer companion Jessica Shearer and affiliate Hyun Seung Suh.
Learn extra: Blue Owl buys Atalaya for $450m
“We consider our firms are faring effectively by design, as we have now deliberately invested in giant, high- high quality companies and recession resistant sectors, usually backed by operationally subtle, non-public fairness sponsors who’ve giant money fairness investments in these companies.
“Regardless of the upper for longer charge atmosphere, we haven’t seen any materials pickup in stress throughout the throughout the portfolio. We proceed to have a small variety of debtors on our watch record, however this subset has remained comparatively static over the previous couple of quarters.”
Wilson and Drapkin commented on the resilience of personal credit score regardless of the decrease deal quantity of the previous yr and mentioned they had been eager for elevated exercise within the second half of 2024.
Learn extra: L&G sees “good momentum” in non-public markets as AUM ticks as much as £52bn
“We additionally consider the ‘increased for longer’ atmosphere will create extra opportunistic financing transactions for firms which might be respectable performers however have unsustainable stability sheets,” the pair remarked.
“These could take the type of extra conventional legal responsibility administration workouts or different extra artistic options with an intention of decreasing leverage and/or curiosity expense.”
Additionally they remarked that because the variety of gamers within the non-public credit score trade expands, “the power to distinguish your choices and supply artistic options has turn into much more invaluable.”
“Scale is a kind of key differentiators as bigger platforms are likely to have a number of benefits in M&A processes, together with increased high quality groups with in-depth and sector-specialised market information,” they mentioned.
Learn extra: Personal credit score “tidal wave” of defaults by no means materialised
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