00:00Meanwhile, the market has been tumultuous under the surface for a while, and we've talked about, you heard Mark talk
00:05extensively about the software concerns and how much that's really impacting private credit in particular.
00:12Where are we in that washout? Do you have a sense of how far along in terms of recognizing who
00:17the winners and losers are going to be in the software shakeout?
00:20Yeah, and I think Mark spoke to it. When it comes to private credit, we saw the Blackstone headlines overnight.
00:29I think that's going to take a while to work its way through the system.
00:34I think we're going to continue to see elevated redemptions. I think some of these structures are going to come
00:41under pressure.
00:42So in publicly traded BDCs, they're trading right now on average at about 23% discount. The private BDCs and
00:52the interval funds have to return capital at NAV, and the rotation is going to be redeem those private BDCs
01:01and interval funds and transition to the public BDCs.
01:06You'll get a higher yield, even if the NAV discount doesn't close. So I think you're going to see that,
01:12and I think ultimately what happens there is it's going to put pressure for there to actually be secondary sales
01:19in private credit.
01:21And the other thing with private credit is not all funds are created equal. Some funds have disproportionate amount of
01:30exposure to the software sector.
01:32And again, I think within the software sector, this is a structural re-rating that is deserved. So I think
01:43really doing your homework on what kind of exposures the underlying has is going to be really important.
01:50I also think investors, big endowments, high net worth are over allocated to private assets. Their private equity isn't cash
02:01flowing, and now they're going to have a similar issue in private credit. So I think it's going to be
02:07a painful 18 to 24 months.
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