Weekly Debt Capital Markets Digest
News
Articles I found interesting. Doesn’t mean I agree with their takes.
The FOMC voted 9-3 to keep the Fed rate unchanged at 3.50%-3.75%, with three dissenting voices advocating for a hike to address inflation (CNBC)
The Bank of England kept the UK rate at 3.75%, as anticipated after inflation fell to a 15-month low of 2.6%. Still, three of nine committee members voted for a 25bps hike (CNBC)
BlackRock’s acquisition of HPS, even at a high valuation, is paying dividends, with the combined platform winning deals (i.e., Meta) neither could secure alone. The deal increased BLK’s private credit AUM 4x (Bloomberg)
Blue Owl said redemptions are easing, but fundraising also slowed. The company raised $7.6B in Q2 vs. $12.1B a year ago, while credit AUM fell from $159B to $158B (Benzinga)
Cracks are appearing in private credit, although there is no explosion of stress. Q&A with PitchBook’s head of private credit and private equity research on conflicting trends in the market (Morningstar)
Revolut will offer EU customers access to private equity and private credit investments for as little as €1 through a Revolut-managed feeder. Apollo, Ares, and Hamilton Lane funds are among those selected (Bloomberg)
Fitch reported private credit defaults hit a record 6%, up from 5.7% QoQ, driven by maturity extensions of stressed loans, not PIK or interest deferrals. Defaults were highest in Industrials at 10.4% and lowest in Software at 1.2% (Bloomberg)
PIMCO is anchoring the debt for Oracle’s $16B data center build-out, but on its own terms. Instead of shorter-term, lower-yielding debt, it pushed for higher-yield, long-term bonds matching the long-term lease (Bloomberg)
U.S. insurance regulators are concerned about the complexity and circular ownership of multi-asset securitized products, such as Apollo’s AMAPS (Round #44), held by PE-backed life insurers like Apollo and KKR (Financial Times)
The SEC is probing Dodgers owner’s insurer, Delaware Life, for allegedly failing to disclose $16B (42% of assets) in affiliated private credit investments, reporting just $1B (3%) instead (WSJ)
European loans are priced ~4bps tighter than U.S. loans, after historically being 22bps wider, making Europe more attractive to borrowers. U.S. private credit woes / BDC redemptions have pushed U.S. pricing higher (Bloomberg)
Big UK banks challenged the BoE’s comparison of UK and U.S. capital rules, arguing their 12.6% CET1 requirement exceeds the adjusted U.S. level of 10.7%, tying up £23B of capital and costing £750B of lending capacity (Financial Times)
European banks’ AT1 bond spreads (a type of bank debt) hit a record low of 211bps, but investor demand persists. Some view investors as far too complacent (Bloomberg)
The UAE sold a record $30B of USD- and EUR-denominated bonds YTD, $3.7B above the 2020 record, despite the Middle East conflict. Spreads widened to 77bps over U.S. Treasurys from 65bps before the war (Bloomberg)
Asian private credit fundraising hit a 10-year low. Just five Asia-focused funds raised $1.2B in 1H26, vs 29 ($10B) last year and 23 ($20B) in 2022. Also, LPs continue to favor U.S. managers over Asian firms (Financial Times)
Hong Kong launches Chinese government bond futures after two failed attempts (2017 and 2023). Significantly higher foreign ownership and demand for hedging make conditions more favorable this time (Bloomberg)
Bain-backed U.S. Renal Care plans to return assets stripped from lenders in a 3-year-old LME as it seeks to refinance a $1.2B loan due in 2028 (Bloomberg)
User Acquisition financing, provided by PvX Partners, offers capital to mobile apps. Instead of EBITDA, lending is based on custom metrics such as Return on Ad Spend and User Retention Rate (Bloomberg)
Transactions
Blackstone will acquire $25B of Australian home and personal loans from HSBC, subject to regulatory approval. The portfolio will be held across its credit, insurance, real estate, and tactical opportunities strategies (Reuters)
Fortress signed a $1.5B forward flow loan deal with Irish fintech Wayflyer, which provides unsecured loans to e-commerce businesses (Irish Times)
CoreWeave raised a $2.6B loan tied to its Anthropic computing deal after conceding 1%-1.25% higher pricing to lenders. The deal is priced at SOFR + 5.50% and discounted to 96-97 (Financial Times)
ING completed $10B of SRTs, including $6B tied to various U.S. and EU project financings, such as data centers, and $4B tied to small and medium-sized Dutch companies (Bloomberg)
Philippines’ BDO Unibank raised ₱132B ($2.1B) in the country’s largest-ever corporate debt issuance, 26x the initial offer due to strong institutional demand. The bond yields 6.26% (Business Inquirer)
NVIDIA will guarantee $250B of OpenAI debt to cover data center leases and facility build-out, but not the NVIDIA chips that would go inside (WSJ)
Germany’s soccer/football league Bundesliga is raising a €1B, 20-year loan from U.S. investors, including Apollo (Goal)
Chart of the Week
In the absence of forward guidance, the market is trying to figure out the Fed’s next move.
Per Apollo: “One interpretation of [the rate movement], is that markets understand the Fed’s commitment to 2% inflation, but with no forward guidance, the market does not understand how the Fed will get to 2% inflation. Is the way to 2% inflation through higher rates, a smaller balance sheet or tighter financial conditions? The answer to this has significant implications for the yield curve and how and when we will achieve 2% inflation. The lack of clarity about how to get there is what’s pushing yields higher because there is now a risk that it may take longer or involve a policy mistake.”
Bloomberg is offering 60% off its annual subscription ($180 vs $399) LINK
If you’re not a subscriber and the article is behind a paywall, search for the article title online. It’s often reprinted on Yahoo Finance for free.
WSJ Online is offering 65% off its annual subscription ($4 per week vs $11) LINK
These are NOT sponsored links, just money-saving tips.