Weekly Debt Capital Markets Digest
News
Lee Robinson of Altana Wealth, who made 900% betting against subprime mortgages is launching a fund to bet against private credit-exposed insurers (Bloomberg)
Morgan Stanley’s $7B North Haven Private Income Fund received redemption requests for 11.6% of outstanding units, but honored its 5% quarterly cap (Reuters)
US life insurers hold $807B in private credit, representing 20% of their $4T fixed-income portfolio. The allocation is expected to increase (Bloomberg)
Damis Holdings files for Chapter 11, with the company’s liabilities estimated at $500m-$1B (Petition)
BoE has sent alts a hypothetical stress scenario that includes rising inflation, a 4% contraction in UK GDP, and an increase in interest rates to 7%. It is viewed by participants as too severe (ACI)
Apollo’s $26B Apollo Debt Solutions BDC received redemption requests for 17% of its outstanding units (4.3% from onshore investors and 12.5% from offshore investors), but honored its 5% cap (CNBC)
PE zombie funds are expected to multiply as M&A activity remains muted. Among LPs, 54% would expect to cut fees, 18% to reset incentives, and 11% to remove managers (Bloomberg)
Ares’ $11B Ares Strategic Income Fund, a BDC, received redemption requests for 14.4% of its outstanding units (vs. 11.6% last quarter) but honored its 5% cap (Financial Times)
Blackstone REIT’s $343m loan on an office building in Chicago’s financial center has gone into default after being on a watchlist since 2022. Chicago’s office market has struggled to recover from the pandemic (Bloomberg)
25% of mid-sized insurance companies tracked by Clearwater own stakes in private credit funds to which they also lend. Clearwater doesn’t track the largest insurers, where the figure may be higher (WSJ)
JPMorgan Public and Private Credit Fund, an interval fund, won approval from the SEC for monthly 2% redemptions instead of quarterly, semi-annual, or annual redemptions, as required by law (Bloomberg)
European PE executives increasingly borrow against their carried interest in their funds, as exits remain muted (Financial Times)
Indian banks are offering Non-Resident Indians dollar-denominated deposits at up to 7.1%, and lending up to 9x against those deposits. The purpose is to attract dollars back into the country following a sharp fall in forex reserves (Bloomberg)
Venezuela hired Centerview Partners to restructure its $240B debt, which is higher than market participants’ prior estimates of $150B-$200B (Financial Times)
Sheila Bair, Former Chair of the FDIC, is concerned about bank deregulation, banks’ exposure to private credit, and parallels with the events that led to the 2008 financial crisis (Politico)
US IG bond sales hit a record $175B in June, up 60% YoY, driven by the AI capex boom and concerns over potential rate hikes (Bloomberg)
10.6%, or 100 million Chinese consumers are behind on debt payments, which has resulted in $329B of non-performing loans for financial institutions, a 21% increase y-o-y (Bloomberg)
SEC is probing Continuation Vehicles (CVs) used by private equity firms, including conflicts of interest, valuations, and whether investor disclosures are sufficient (Reuters)
Private-to-public BDC arbitrage is gaining momentum, but there are some differences in portfolio composition (Bloomberg)
144A bond allocations by U.S. corporate treasurers have risen to 2% of portfolios from 0% two years ago, driven by an average 52 bps premium over similarly rated public bonds (Bloomberg)
Insurers have increased their allocation to private credit from 4% in 2018 to 9% today and now own an estimated 30%–50% of all private credit assets (AI-CIO)
“Credit allocators don’t fully appreciate that we’ve moved into a higher-interest-rate environment that many are not accustomed to.” – Interview with PGIM Credit’s Co-CIO (AI-CIO)
SpaceX’s $2.5B bonds saw their spread widen to 112 bps over the risk-free rate from 106 bps just days after issuance, suggesting some softening in investor confidence, which is unusual for such a recently issued bond (MarketWatch)
Aggressive LMEs that disadvantaged certain creditors are increasingly derailing prepackaged bankruptcies, turning what were meant to be fast-track restructurings into protracted and contentious Chapter 11 cases (WSJ)
India’s ABS market has surged to a record $16B through March (35% y-o-y), as global banks gain exposure to its fast-growing domestic credit market (Bloomberg)
Transactions
Brookfield is seeking a $525m loan for La Trobe Financial Corp, an Australian non-bank lender, to fund a payout to investors and refinance existing debt (Bloomberg)
Apollo-backed Eolo SpA is seeking a $575m loan from Apollo to refinance its existing debt (Bloomberg)
Blackstone-backed data centre operator AirTrunk is in talks to secure a $3B loan to finance a new hyperscale campus in Sydney (Bloomberg)
BMO is offering a $775m loan for HIG Capital-backed Pellera Technologies at an 8-cent discount (Bloomberg)
Sony ended a 28-year absence from the USD bond market, issuing $1B of 5- and 10-year USD-denominated bonds. The 10-year tranche priced at 60bps over Treasuries (Bloomberg)
ByteDance is in talks to raise a $20B, 3- to 5-year loan, which would be its largest-ever offshore borrowing (Bloomberg)
China sold €5B ($5.7B) of euro-denominated bonds, its biggest-ever deal in euros. Its 5-, 8-, and 12-year notes were priced at 3 bps, 12 bps, and 22 bps above the mid-swap rate, respectively (Bloomberg)
Mexico raised $6.3B in bonds to finance buybacks of existing debt, with the new issuance priced at 185–195 bps over comparable Treasuries, versus 220 bps for the outstanding debt (Bloomberg)
