Frister Haveman’s Post

𝗕𝗗𝗖𝘀 𝗮𝗿𝗲 𝗴𝗲𝘁𝘁𝗶𝗻𝗴 𝗮𝗹𝗹 𝘁𝗵𝗲 𝗮𝘁𝘁𝗲𝗻𝘁𝗶𝗼𝗻 𝗶𝗻 𝗽𝗿𝗶𝘃𝗮𝘁𝗲 𝗰𝗿𝗲𝗱𝗶𝘁 👀 But here’s the thing: 𝗕𝗗𝗖𝘀 𝗮𝗿𝗲 𝗼𝗻𝗹𝘆 𝗮 𝘀𝗺𝗮𝗹𝗹 𝗽𝗮𝗿𝘁 𝗼𝗳 𝘁𝗵𝗲 𝗽𝗿𝗶𝘃𝗮𝘁𝗲 𝗰𝗿𝗲𝗱𝗶𝘁 𝗺𝗮𝗿𝗸𝗲𝘁. We mapped data across ~30 BDCs managed by some of the largest private credit players globally. Across the eight managers analysed, combined BDC AUM stands at ~$335bn. That sounds large until you compare it to the broader credit platforms behind them. Combined credit AUM across the same group now exceeds $2.9tn, meaning 𝗕𝗗𝗖𝘀 𝗮𝗰𝗰𝗼𝘂𝗻𝘁 𝗳𝗼𝗿 𝗷𝘂𝘀𝘁 𝟭𝟭% 𝗼𝗳 𝘁𝗼𝘁𝗮𝗹 𝗰𝗿𝗲𝗱𝗶𝘁 𝗔𝗨𝗠. Blue Owl Capital stands out as the most BDC-heavy platform in the peer group, with 47% (~$74bn) of its private credit AUM in BDC structures. Blackstone holds the largest dollar amount in BDCs at ~$101bn (mostly BCRED, $85bn), but that still represents only 22% of its $458bn credit platform. In contrast, several scaled alternative asset managers rely far less on the structure. Apollo Global Management, Inc., Brookfield, KKR, and The Carlyle Group each have less than 6% of their private credit AUM in BDCs, with more than 94% allocated to other credit vehicles. Apollo is perhaps the clearest example. Of its $834bn credit platform, 96% sits outside BDCs, driven largely by Athene’s massive insurance balance sheet and investments in investment-grade strategies. 𝗠𝗲𝘁𝗵𝗼𝗱𝗼𝗹𝗼𝗴𝘆: We mapped both public and private BDCs for each of the managers analysed. Then we pulled the total assets from the filings and summed it up at the sponsor level. Finally, we got the credit AUM for each sponsor from their 10Ks to calculate the portion of credit AUM that sits outside of BDCs. #PrivateCredit #BDCs #Data

𝐀𝐩𝐨𝐥𝐥𝐨’𝐬 $𝟑𝐛𝐧 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐜𝐫𝐞𝐝𝐢𝐭 𝐟𝐮𝐧𝐝 𝐣𝐮𝐬𝐭 𝐛𝐞𝐜𝐚𝐦𝐞 𝐭𝐡𝐞 𝐬𝐞𝐜𝐭𝐨𝐫’𝐬 𝐥𝐨𝐮𝐝𝐞𝐬𝐭 𝐰𝐚𝐫𝐧𝐢𝐧𝐠 ⚠️ Apollo Global Management, Inc. has reportedly held talks to sell MidCap Financial Investment, its publicly listed BDC focused on private credit, with The Wall Street Journal reporting a valuation of about $3 billion for the fund and its portfolio. 𝐅𝐫𝐞𝐬𝐡 𝐢𝐧𝐬𝐢𝐠𝐡𝐭𝐬 - 𝐟𝐨𝐥𝐥𝐨𝐰 𝐧𝐨𝐰. 𝓚ᴇʏ 𝗣ᴏɪɴᴛꜱ 🔹 𝐀 $𝟑𝐁𝐧 𝐅𝐮𝐧𝐝 𝐇𝐢𝐭𝐬 𝐓𝐡𝐞 𝐌𝐚𝐫𝐤𝐞𝐭 Apollo Global Management, Inc. values MFIC and its portfolio at about $3 billion, according to the report. A sale would put one of private credit’s public vehicles directly under the microscope. 🔹 𝐃𝐞𝐟𝐚𝐮𝐥𝐭𝐬 𝐀𝐫𝐞 𝐍𝐨 𝐋𝐨𝐧𝐠𝐞𝐫 𝐐𝐮𝐢𝐞𝐭 Default in the fund reportedly rose to 5.3% in the first quarter from 3.9% in December. That jump matters because BDC investors are already watching credit quality with less patience. 🔹 𝐍𝐀𝐕 𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭𝐬 𝐀𝐫𝐞 𝐅𝐨𝐫𝐜𝐢𝐧𝐠 𝐓𝐡𝐞 𝐈𝐬𝐬𝐮𝐞 Management has reportedly used cash to repurchase shares because they traded at deep discounts to net asset value. That is not just a valuation problem. It is a confidence problem. 🔹 𝐓𝐡𝐞 𝐁𝐃𝐂 𝐒𝐭𝐫𝐞𝐬𝐬 𝐓𝐞𝐬𝐭 𝐈𝐬 𝐖𝐢𝐝𝐞𝐧𝐢𝐧𝐠 Fitch Ratings recently warned of a deteriorating BDC outlook, citing elevated redemptions and above-average troubled loans. The sector’s growth story now has a harder question attached: who absorbs the pressure when liquidity tightens? ❓Is this just one fund changing hands, or the first serious sign that public private credit vehicles are being repriced in real time? 👉 Would you buy the weakness in BDCs here, or wait until defaults, NAV discounts and redemption pressure settle down? #privatecredit #bdc #creditmarkets

BDC Valuation Misdeeds: It’s Not Just BlackRock In my latest article, I describe the journey of an ARCC loan that raises clear valuation questions See article link in comments. This loan (borrower is VPROP) owned by Ares' ARCC BDC is unusual in that it includes 4 loans, seemingly identical other than size, with valuation differences of 85 points. ARCC also owned a large amount of the common equity and so I am able to illustrate how a dramatic drop in the valuation of the common, initially failed to have any impact on the valuation of the loans, with obvious implications for the fees ARCC earned. Clearly the dramatic drop in equity should have had a knock on effect on the value of the loans. It didn't. At least initially. Still to this day about 40% of the loan is valued at par. And by the way the loan is 14% Paid in Kind. A big fat coupon great for fee generation. Not so great for BDC investors if they never actually earn the coupon. Fear not for Ares. They did fine. 10 year of fees based on a phantom coupon and inflated valuations. #bdcs #privatecredit #privateequity

"Private credit has grown significantly, now managing over $2 trillion in assets, and is expected to reach $3.4 trillion by 2030. Despite recent challenges such as borrower defaults, regulatory focus, and fund redemptions, portfolio managers remain optimistic about growth, although they acknowledge the asset class is entering its first significant credit cycle with increased competition and pressure on returns." #PrivateCredit #AlternativeInvestments PwC https://lnkd.in/ebSDcRND

Private Credit UBS Says Rich Clients Lost Some Interest in Private Credit “Interest in private credit among our wealthy clients has been more measured in the current environment” That’s “clearly reflecting macro uncertainty and a preference for liquidity and capital preservation” ·        UBS Group AG Chief Financial Officer Todd Tuckner said interest in private credit among the lender's wealthy clients has been more measured in the current environment. ·        Tuckner said this is clearly reflecting macro uncertainty and a preference for liquidity and capital preservation. ·        Private credit remains a very modest portion of the bank's balance sheet, with private credit funds accounting for around 50 to 60 basis points of its total leverage exposure. UBS Group AG Chief Financial Officer Todd Tuckner said that recent developments have cooled excitement among the lender’s wealthy clients about private credit, adding to the challenges facing the asset class. “Interest in private credit among our wealthy clients has been more measured in the current environment,” Tuckner said on an analyst call Wednesday. That’s “clearly reflecting macro uncertainty and a preference for liquidity and capital preservation.”

Citi and BlackRock’s HPS sign €15bn private credit deal — a clear signal that private credit is maturing from niche to core allocation for institutional investors. Macro trends - Private credit growth continues as banks retrench under regulatory and capital pressures, while fixed-income yields remain elevated vs. pre-2022 lows. Investors seek yield, diversification and bespoke structures amid low public credit issuance. - Geographic shift toward Europe as corporates seek bespoke financing solutions; manager concentration increases (large platforms consolidating market share). Key factors driving the deal - Scale and credibility: Citi’s distribution plus HPS/BlackRock credit capabilities lower execution friction and expand investor access to private credit returns. - Deal structure: likely diversified across leveraged loans, unitranche and mezzanine with sponsor-backed protections—critical for loss mitigation. - Liquidity and pricing terms will reflect current rate regime, covenant quality and macro outlook. Risks - Credit cycle: elevated default risk if Europe soft-landing fails; stressed sectors (real estate, leveraged consumer) vulnerable. - Liquidity mismatch and NAV uncertainty for allocators using mark-to-model pricing. - Manager risk: underwriting discipline under pressure when raising capital at scale. Actionable insights - Institutional allocators: conduct granular due diligence on covenant strength, recovery assumptions and liquidity gates; prefer staggered deployment. - Corporates/sponsors: leverage private credit for speed and covenant flexibility but expect higher cost of capital than bank pre-crisis. - Asset managers: focus on origination edge and stressed-cycle workout capability; scale alone does not replace underwriting. Expert takeaway / forecast The €15bn transaction accelerates institutionalisation of European private credit. Expect further consolidation, tighter spreads for top managers, and rising importance of covenant quality during an uneven macro cycle. Investors should balance yield objectives with rigorous downside analysis. What do you think? Share your experience with private credit allocation or underwriting. — Viktor Kopylov, PhD, CFA. More author's insights: t.me/si14Kopylov

𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐈𝐧𝐬𝐢𝐠𝐡𝐭 Private credit becomes a board issue because it shifts three operating realities. 1) 𝐋𝐢𝐪𝐮𝐢𝐝𝐢𝐭𝐲 𝐫𝐢𝐬𝐤 𝐬𝐭𝐨𝐩𝐬 𝐛𝐞𝐢𝐧𝐠 𝐭𝐡𝐞𝐨𝐫𝐞𝐭𝐢𝐜𝐚𝐥 In a stress event, the question is not “is this a good loan?” It is “can we convert this to cash when we need to?” Insurers are not hedge funds. Claims obligations, collateral dynamics, and regulatory capital expectations create a different definition of resilience. 2) 𝐕𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧 𝐛𝐞𝐜𝐨𝐦𝐞𝐬 𝐚 𝐭𝐫𝐮𝐬𝐭 𝐩𝐫𝐨𝐛𝐥𝐞𝐦 When assets are not continuously price-discovered, the mark must be defendable. If valuation is slow, inconsistent, or overly dependent on manager inputs, you risk board-level surprises: capital volatility, rating questions, and awkward stakeholder conversations. 3) 𝐂𝐨𝐧𝐜𝐞𝐧𝐭𝐫𝐚𝐭𝐢𝐨𝐧 𝐫𝐢𝐬𝐤 𝐡𝐢𝐝𝐞𝐬 𝐢𝐧𝐬𝐢𝐝𝐞 𝐝𝐢𝐯𝐞𝐫𝐬𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧 Private credit portfolios can look diversified by fund count while being concentrated by sponsor, sector, deal structure, or macro driver. When conditions tighten, correlations rise and “diversified” portfolios can behave like one trade. The opportunity is real: insurers who can govern private credit with decision-grade discipline can capture return premia without sacrificing resilience. The firms that cannot will learn about weaknesses through stressed liquidity, contested valuations, or concentrated losses. 𝐏𝐥𝐚𝐲𝐛𝐨𝐨𝐤 Four actions CEOs, CFOs, CROs, CCOs, and MDs can implement now. ↳ 𝐑𝐮𝐧 𝐚𝐧 𝐢𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞-𝐧𝐚𝐭𝐢𝐯𝐞 𝐥𝐢𝐪𝐮𝐢𝐝𝐢𝐭𝐲 𝐬𝐭𝐫𝐞𝐬𝐬 𝐭𝐞𝐬𝐭 𝐭𝐡𝐚𝐭 𝐚𝐬𝐬𝐮𝐦𝐞𝐬 𝐲𝐨𝐮 𝐜𝐚𝐧𝐧𝐨𝐭 𝐬𝐞𝐥𝐥 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐜𝐫𝐞𝐝𝐢𝐭. Model severe but plausible scenarios: claims spikes, slower recoveries, collateral calls, downgrade pressure, and policyholder behavior shifts. Treat “no secondary market liquidity” as a base case, not a worst case. ↳ 𝐁𝐮𝐢𝐥𝐝 𝐚 𝐯𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧 𝐠𝐨𝐯𝐞𝐫𝐧𝐚𝐧𝐜𝐞 𝐬𝐭𝐚𝐜𝐤 𝐭𝐡𝐚𝐭 𝐢𝐬 𝐚𝐮𝐝𝐢𝐭-𝐫𝐞𝐚𝐝𝐲. Define who owns valuations internally, what independent review exists, what triggers a challenge or re-mark, and how quickly issues escalate to the board. If the valuation story cannot be explained clearly, the exposure is not controlled. ↳ 𝐀𝐠𝐠𝐫𝐞𝐠𝐚𝐭𝐞 𝐜𝐨𝐧𝐜𝐞𝐧𝐭𝐫𝐚𝐭𝐢𝐨𝐧 𝐚𝐜𝐫𝐨𝐬𝐬 𝐚𝐥𝐥 𝐦𝐚𝐧𝐚𝐠𝐞𝐫𝐬 𝐚𝐧𝐝 𝐯𝐞𝐡𝐢𝐜𝐥𝐞𝐬. Report exposure by sponsor, borrower, sector, geography, and macro sensitivity. Add a plain-language view: “What could cause multiple positions to deteriorate at once?” This is where hidden correlation usually sits. (For character limits!) The remaining part of this post continues in the comment section, do read on below. — ♻ Repost to help others in your network. 💾 Save this post for future reference. ➕ Follow me ( Kirill Patyrykin ) for more

🏦 THE TRANSPARENCY PIVOT: Apollo Pledges Daily Pricing as AUM Hits $1 Trillion Apollo Global Management is rewriting the private credit playbook. By pledging to provide daily pricing for its credit funds by September, CEO Marc Rowan is directly addressing the "black box" criticism that has long dogged the private markets. This move comes as Apollo officially crosses the $1 trillion Assets Under Management (AUM) threshold—a milestone reached three years after the initial target was set. The Transparency Revolution: Breaking the Quarterly Lag Traditionally, private funds value their portfolios every 90 days. In a volatile 2026, Apollo is moving to close that gap to attract the next wave of retail and institutional capital. The New Standard: "When public markets reprice, private markets should too," according to CEO Marc Rowan. Conservative Marking: Apollo will adopt a "lowest mark" policy—if a position is held by multiple firms, Apollo will take the lowest valuation to ensure maximum credibility. Performance Reality Check: Cooling Returns in 2026 While AUM is soaring, returns in the private credit and equity space are cooling compared to the 2025 "Gold Rush": Direct Lending: +0.5% return in Q1 (compared to 8.5% over the last 12 months). Hybrid Value: +4.0% return (positioned as the firm's primary growth driver). Flagship Private Equity: -0.3% return (a slight dip reflecting broader market headwinds). Strategic Moat: Avoiding the Software Trap As many peers struggle with AI-driven disruption in software-heavy portfolios, Apollo is leaning into Asset-Backed Finance (ABF) and insurance-linked products. Inflow Surge: $115 billion in new capital this quarter, driven by the acquisition of UK insurer Pensions Insurance Corporation. Retail Reach: Wealthy individual investors contributed $4 billion this quarter alone. The Road to $1.5 Trillion With the $1 trillion milestone secured, Apollo’s next target is $1.5 trillion by 2029. The strategy is clear: remove the barriers to liquidity through daily pricing and integrate insurance assets to create a diversified financial utility. The Investor Takeaway: Apollo is effectively "institutionalizing" private credit by offering transparency comparable to public markets. If they can maintain lending standards while scaling to $1.5T, they will set a new industry benchmark that competitors will be forced to follow. #ApolloGlobal #PrivateCredit #FinanceNews #WallStreet #AUM #AssetManagement #Transparency #MarcRowan #Insurance #APO #PrivateEquity #StrategicGrowth #phtco

I've been the unpopular voice on private credit for five years. 📉 A month ago, Jamie Dimon caught up. His shareholder letter cut straight to it: losses in the $1.8 trillion private credit market will run deeper than anticipated. And most of the industry is still looking the other way. Here's what nobody on the sell side will tell you: 🔺 "Stability" in private credit means refusing to mark-to-market. The ship takes water. You simply cannot see the waterline. 🔺 PIK structures operate as a corporate credit card servicing another corporate credit card. We’re stacking zombie companies and calling it yield. 🔺 The duration mismatch is the detonator. Retail investors get sold "liquid" instruments backed by 5-7 year illiquid loans. Everything looks stable until everyone heads for the exit at once. Then the gate slams shut. 🔺 BlackRock's BDC already ran this exact script: 19% NAV write-down, withdrawals suspended. That was a canary, not a black swan. 🔺 Insurance regulators are tightening capital requirements on private credit holdings. The largest backers will pull back on new deals - exactly when leveraged borrowers need to refinance. 🟢 At Nomad Fulcrum, we built the entire operation on one uncompromising principle: ultra-liquid markets only. No spreadsheet valuations. No 7-year exit gates. No position where the price is set by a manager instead of the market. When the cycle turns, that extra 2% yield becomes irrelevant if you cannot locate the exit. Liquidity is the only form of capital that compounds without apology. Are you holding positions where the valuation is set by a manager - or by the market? In the next 12 months, that distinction will be everything.

There is a lot of attention currently being given to Private Credit BDC's. Positions are fairly entrenched on both sides with supporters pointing to solid long term returns and the benefits of infrequent market to market changes. Detractors see opaque structures, limited liquidity and, over time, an erosion of inherent advantages through sloppy underwriting and lack of discipline. Having just won the LSEG Lipper award for Best Subordinated Debt Fund over 3 years in Europe Switzerland and UK, I though it was worth putting the performance of the Titan Wealth Hybrid Capital Bond Fund in context with BDC's. The Hybrid Capital fund is UCIT's with daily liquidity and zero defaults since inception in 2016. In a representative selection of 20 large cap BDC's, the median return since Jan 2023 is 27.29 %, the arithmetic average 25.12 %. In comparison, the Titan Hybrid Capital Bond Fund delivered 40.35%*. There are some clear outperformers in the BDC universe plus if you look back over a longer period, the BDC's do much better on an absolute and relative basis. *Source = Bloomberg The success of BDC's in 2017 - 2022 was impressive and that period generated high risk-adjusted returns. BUT the success and inflows led to poor underwriting and capital allocation without discipline, leading to this subsequent underperformance. This is likely to continue and potentially get worse as credit conditions tighten for leveraged / private businesses and AI impacts various sectors within the BDC portfolios. The public Hybrid Capital market does not face the same headwinds and we can expect the relative out performance to continue.