00:00Let's start with Apollo, this plan to, you know, start showing their marks monthly and hopefully daily.
00:06That is their intention. Talk to us about the pressure that led up to this moment.
00:12Yeah, sure. So as you mentioned, there's been pressure on private credit firms and that, I guess you could say
00:18it started because of all these redemption requests that came through at a bunch of firms,
00:23whether it was Blue Owl and then the next was BlackRock HPS and just today Cliffwater.
00:29We reported, my colleague reported that Cliffwater was the redemption requests it received was a lot more than it was
00:35willing to kind of bear, if you like.
00:38And so they ended up, I don't know the exact number, but I think it was 7 percent that they
00:42allowed.
00:42But I guess my point is, is that it's another layer of complexity for these private credit firms in their
00:48push to sort of be more transparent and offer investors.
00:53a look under the hood of these institutions that are historically quite opaque.
00:57With regard to Apollo's comments about the idea of, I guess, providing a more routine mark, would that actually help,
01:03though?
01:03I mean, I mean, I guess one on one hand, I mean, maybe we finally do get to see if
01:07if they're if they are really struggling or not with some of these products.
01:11But but let's say they weren't struggling. I mean, would that change anything?
01:14Because some of this isn't just about Apollo. It's about the broader ecosystem and what's going on.
01:18Great. But I think that would change it inherently. I think there's two points to this.
01:22One is Apollo would provide their own marks first.
01:25But the idea is that at some point, like the public bond market, there would be third party assessors of
01:32these lines of these of these loans.
01:35Yeah. Actively. And that would hopefully provide more transparency and credibility to the debt.
01:42These are a lot of companies that were underwritten maybe five, six years ago at the height of a particular
01:49LBO boom.
01:50And a lot of those companies were software. And now those software companies are now feeling pressure that they did
01:56not feel 18, 24 months ago.
01:59And who underwrote a lot of these loans. It was a lot of private credit firms at a time when
02:04banks pulled back from that space.
02:07Yeah. Right. So to oversimplify is the hope that, you know, if by providing more information when it comes to
02:13pricing, how things are actually being valued,
02:15that, you know, maybe investors will want to pull out less money because they see that actually things aren't as
02:22bad as maybe some of the headlines would lead you to believe?
02:26You would hope so. I think that is the overarching goal here for these private credit firms.
02:31You know, they need more and more money to continue investing that money and then building on their AUM and
02:37their returns.
02:39So that's why I think they're also stopping the I guess gating the redemptions at a certain percentage point. Right.
02:47Because they need to keep maintaining a certain amount of liquidity within what I think they would call it semi
02:53liquid vehicles.
02:54So we can we can argue the the I guess that parlance. But semi liquid is the term that is
03:01bandied about.
03:02Some investors trying to get their money out might disagree with the phrasing there.
03:06Say that again. Some investors in these semi liquid vehicles who want to redeem beyond the 7 percent cap might
03:12disagree.
03:13Absolutely. You know, you'd have to ask them themselves. Very much so.
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