00:00Mark, when you said that private credit is having something of a moment with the financial press,
00:06not surprisingly, somebody asked a question.
00:11And what you were referring to, if I may summarize,
00:17there have been a handful of bankruptcies among private borrowers in the United States,
00:23a few sudden write-downs of debt on people's books and many questions about the credibility of asset valuations.
00:32And, of course, the CEO of the world's biggest bank, Jamie Dimon, made reference to cockroaches,
00:37and that got everybody excited.
00:40Are these worrying signs to you?
00:43No.
00:44And I'll repeat a little bit of what I said yesterday.
00:48And Jamie, I think, walked back the notion of cockroaches yesterday.
00:51This is yesterday being?
00:56GIC Insights.
00:57Yes.
00:57Okay.
00:58Just so everybody understands, GIC, one of Singapore's two, eminent sovereign wealth funds,
01:03had both Jamie Dimon and Mark as speakers.
01:06So I think the failure to appreciate both of those companies,
01:11I don't know if they're private credit or not.
01:13They were both funded and underwritten by the banking sector.
01:16And I ask a series of questions like, is a private loan to a public company private credit?
01:24I don't know.
01:26And we keep going through this definitional issue.
01:29But I would say the following.
01:33Most, the size of the private credit market as I see it is some $41 trillion.
01:38Most of the market is investment grade.
01:40A fraction of it, some $2 trillion, is below investment grade levered lending.
01:44And so much of the focus is on this notion of levered lending and the tricolors and the first brands.
01:52And if you think about what's happened, the shock from tariffs has now adjusted into the economy.
01:58The shock from high rates has now adjusted into the economy.
02:02Credit stats are actually improving rather than declining.
02:05That does not mean we will not have late cycle banking behavior because there are good banks and bad banks
02:11and good insurance companies and bad insurance companies and good asset managers and bad asset managers.
02:16But there's nothing that I see that is systemic.
02:19I think what we miss sometimes by being focused on these couple of unique things is we miss secular change.
02:28Technology change is going to cause massive dislocation in the credit market.
02:31I don't know whether that's going to be enterprise software, which I could make the case is going to benefit or be destroyed by this.
02:40As a lender, I'm not sure I want to be there to find out.
02:44That's not part of the nomenclature or part of the dialogue.
02:48Businesses everywhere are going to be forced to adjust.
02:51Your competitor who adopts new technology is going to be totally different.
02:55The big secular shifts are what cause credit dislocation and credit losses, not, in my opinion, bad underwriting by one or two institutions, in this case banks.
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