00:00This is fascinating because, you know, some of these I wouldn't actually say are myths, like the idea, for example, that private credit is not tradable.
00:08I mean, I think we all pretty much know that, yes, of course, you can buy anything for a price and everything is tradable, right?
00:12But there is one in here that I thought we'd go over, that it's an emerging systemic risk in the financial system.
00:18Give us his argument.
00:20Well, here's the thing.
00:20He's responding to other people in the industry, not just media criticism, which is what they're all focusing on, but private credit industry leaders are also responding to comments from people like Colm Kelleher, arguably the most powerful banker in Europe, the chairman of UBS, who says more and more insurance money moving to private credit could pose to be a systemic risk.
00:41Mark Rohn obviously disagrees with him soundly and he said as much.
00:45But here's the thing.
00:46When we're talking about systemic risk, what happens when there is a downturn and there is a big fall in asset prices?
00:52People will go looking for a scapegoat.
00:55And then you look for that corner of the industry that has grown rapidly, that has grown quickly, and you try and find faults there, which is why people are concerned about it, perhaps not as alarmist as some of the people are making it out to be.
01:07And the more you hear some of these leaders talk about the risks here and keep talking about it again and again and try and play it down, it's not happening.
01:17It's Jeff Gundlach, it's lots of others.
01:19But I do want to get in here that the counter argument might be something like what we're seeing in this Wells Fargo note, conversation between Mike Mayo and Bill Cohen, who's writing a book about Apollo, that, for example, you know, he's brilliant, right?
01:31Mark Rowan built this, you know, this edifice and everyone is trying to copy it.
01:35But if annuitants want their money back at some point and they want it quickly or they lose confidence in the industry, it all comes tumbling down, just like in the great financial crisis.
01:43So essentially, these private credit shops are not that much different to banks, but they're not even regulated like banks.
01:48Well, I'll give you the counter to that argument, which is the argument that Mark's been making, which is when he wants to define the private credit market, he wants to talk about this gigantic $40 trillion financing market.
01:59When most of us talk about the private credit market, we're talking about the junk rated segment, the leverage lending segment.
02:04But junk says who, says the credit rating companies, right?
02:07Can you trust them?
02:08Look, for whatever means and systems we have right now, we know what is below investment grade, and that market is roughly $1.8 trillion to $2 trillion.
02:16What Mark Rowan is saying is, look, that is a riskier segment of the market, but that is not all of private credit.
02:22That is not where Apollo has hitched its bet.
02:25Apollo is betting on this private credit being this $40 trillion market, willing to invest in highly rated investment rate companies.
02:33And when you take that as a whole, you shouldn't be overly concerned about private credit.
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