00:00Well, how about another source of concern, and that would be First Brands, the auto parts company.
00:04We're starting to see the damage from the bankruptcy. UBS accounts have about half a billion dollars in exposure.
00:10Millennium taking a 100 million dollar charge. I know that there's going to be explanations like, oh, there was fraud there potentially.
00:17Yes, but the company's business was also affected by tariffs. So we know its financial problems are not necessarily unique.
00:23Howard Marks of Oaktree has said that bad loans are made in good times.
00:27David, how many other bad loans potentially are out there waiting to blow up?
00:32I do think this is something that's really a key point that you bring up, Charlotte, which is right now, I like to say we're heading into a credit picker's market.
00:41We've gone through a long period where you could buy good credit, you could buy bad credit, and quite frankly, as long as you didn't sell it, the market just kept grinding higher.
00:49Everything was fine. Right now, we're starting to realize that the idiosyncratic differences between credits are going to matter.
00:55If you're good at picking credit, you're going to avoid the first brands of the world, and you're going to earn your yield.
01:00And the yield right now in the mid-sevens for credit is pretty attractive.
01:04But if you pick a first brand or two, you're not going to earn that yield. It's going to look very different.
01:09So I do think there's going to be a separation of the herd right now based on who's good at picking credit and who has just been buying whatever they can find.
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