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Competition in direct lending has inflated EBITDA addbacks.
5.0x leverage today is very different from a decade ago.
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Illiquid Insights
5K posts
Illiquid Insights
@IlliquidInsight
Analyzing private equity, private credit & institutional capital 📊 Join the weekly email list!
Katılım Ocak 2025
447 Takip Edilen3.7K Takipçiler
📍 NEW POST
According to the media, private credit is collapsing.
Here's what they're missing:
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@debt_serious @FT According to the media and half of Substack, private credit is a massive Ponzi scheme that will drag us into the next GFC soon
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We are 6 months in, but @FT still hasn’t gotten the message that First Brands wasn’t private credit. You gotta respect such commitment to ignorance.
Brooke Masters@brookeamasters
Before private credit gets anywhere near the $9tn retirement market, the industry must get serious about protecting retail customers from making terrible mistakes. ft.com/content/5bb2a2… via @ft
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Look at the left chart. Private credit bankruptcy recoveries.
6 out of 13 issuers recovered 25 cents or less. Almost nothing in the middle. You either get out near whole or you get almost nothing.
That's Apollo's Zito "20 to 40 cents" call showing up in actual data.
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@MrnllMtt Thanks for the shoutout. Glad someone is reading
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I was just reading @IlliquidInsight's latest newsletter, and it's nice to see there are still some sane minds around.
"Private credit is facing stress. But stress and collapse are not the same thing"
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@PEoperator I think that makes the big guys that are more sophisticated (Ares, Apollo) much better positioned for the down cycle.
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@IlliquidInsight Not lenders’ forte typically. Looking forward to the fire sales!
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The number of companies taken over by private credit doubled in ‘25.
Lenders that can take equity and execute turnarounds have a big edge as distress grows.
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Private equity’s new target: pro sports
Every US league now has some PE affiliation.
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@aryanrhmn Exactly, now all the big players have moved in: Ares, Blackstone, CVC, 6th Street
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@IlliquidInsight ever since the Dyal HomeCourt fund launched, it was just a matter of time pe flocking into pro sports leagues
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This, from Bloomberg, is not good news for a market segment that is already challenged to separate signal from noise, let alone properly differentiate among funds/firms in this space.
#markets #privatecredit
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The private market is K-shaped:
• Megadeals are driving the M&A rebound
• Large cap PE exits are recovering
• LPs are writing checks to the largest funds
The middle market is still frozen.
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@JunK_OperatoR Ha - I actually covered this in my other post. I agree
x.com/illiquidinsigh…
Illiquid Insights@IlliquidInsight
Major misconception: private credit is taking advantage of retail investors. "Retail" means high-net-worth individuals with financial advisors, not mom and pop. They should understand they're investing in an illiquid product.
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Private credit is panicking:
• Defaults have quadrupled
• ~20% exposure to software facing AI disruption
• Retail investors are running for the exits
What happens next?
Full breakdown tomorrow morning. Sign up below:
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@andrew_aliaj Private credit is also jumping in. Private credit can do very bespoke structuring, and the underlying assets are good: media rights, real estate, etc.
A big area on the credit side is financing stadiums and other infrastructure.
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@IlliquidInsight What is Private Credit currently targeting ?
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@origoinvest Nice post, very in depth. I think the big value add (at least in US) is providing liquidity to the market.
These things rarely trade, so the benefit is a lot more opportunity for liquidity events for exiting owners.
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@IlliquidInsight Forays outside of the Big 5 have not gone so well
x.com/origoinvest/st…
Origo@origoinvest
CVC and Ares caught offside: misadventures in French Football CVC is staring at a massive write-down on its €1.5B investment in the French Football Ligue’s commercial rights after less than 3 years. Ares has marked its residual loan in Eagle Holdings, owner of French club Olympique Lyonnais, down to 32c. In each instance both firms were latching on to a headline thematic while wearing blinders to its evolving nuances. This is what happens when an asset class gains in popularity, invites excess capital and spawns an ecosystem incentivised to do deals. Due to recency and confirmation bias CVC completely miscalculated the result of the French 2024 RFP and I estimate the 10Y commercial rights to underperform the original budget by close to 50%. Given leverage on the deal they will be lucky to recoup 50c on their original equity commitment. PE is great at spinning a narrative though and by bundling this deal along with their other sports investments under the same HoldCo, they can mask the embarrassment going forward. My assessment of their original transaction and re-underwrite of the deal is based on publicly available data in French local sources. Full details on my substack.
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@StealthQE4 Just because you can’t monetize or get out quickly, doesn’t mean the loans are worthless.
I think a lot of it is overblown. Seems to me like a natural credit cycle after years of exploding growth.
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Full transparency:
I have 10% of my assets in private credit.
I’ll wait 4 years(got in late) and let it play out.
Like any bank, there were smart PC loans and disastrous ones.
I continue to try and learn more about the space. I do believe there’s a lot of fear porn.
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