00:00They're not dark lines anymore between these markets, which is really exciting from a distribution perspective.
00:05So we sit here and say, you can create case studies that would suggest, are the markets big enough?
00:11Are they robust enough?
00:13So far, what we see is tremendous size of order books across all the platforms.
00:18And yes, there is dispersion.
00:20There are things to be concerned about.
00:21The prior panel around private credit and some of the challenges there, 100%, there is dispersion.
00:26But when you think about this AI investment, it is generational, but it's also being very well received by capital
00:36formation, both in the U.S. and globally.
00:40When you think about the development of the technology and the power to support it, it feels like ultimately this
00:48is a bet on maybe a handful, a dozen hyperscalers, companies that are developing these AI models.
00:54How are you managing concentration risk in that respect?
00:59It's interesting that you say that because sitting where I sit on capital committee, the number of companies that are
01:05coming through our system that I would admit I haven't heard of.
01:10It's not just super concentrated.
01:13Yes, there's concentration.
01:14But again, there's a lot of innovation going on around power, energy, distribution.
01:20The derivatives of all this investment is filtering through the economy.
01:25And so, yes, it's concentrated.
01:27Yes, we're concerned about risk and we mitigate our risk, you know, pretty carefully at Goldman Sachs.
01:32I'm sure other banks do as well.
01:34But it is spreading into the economy in a way that I think is very constructive and will be absorbed
01:42by many more companies and a lot more innovation.
01:45I mean, I'm telling you, the number of companies that we are now trying to develop a relationship with just
01:52in the U.S. is extraordinary.
01:54It is not just the big five.
01:56Could you give us a sense of what sort of your pipeline is like and how much of that is
02:01kind of accounted for by AI and AI-related deals?
02:06So, a couple stats.
02:08The leveraged finance forward calendar is one pipeline that we look at, right?
02:13It's down to mid-30s from 70s.
02:16So, that's lower.
02:19Obviously, I'll call it the AI-related pipeline around structured IG is up significantly.
02:28And you can see that in high-yield issuance this year, 20% of high-yield issuance is AI-related.
02:37That compares to 12% in IG.
02:41So, again, last year, there was very little being done in high-yield and around the AI ecosystem, and now
02:48it's accelerating.
02:49So, you know, we see robust M&A pipelines.
02:52We see robust, you know, I'll call it AI-driven investment pipelines.
02:58I mentioned the sponsor backlog is still light in terms of sponsor-to-sponsor transaction.
03:04I think the prior panel talked about that.
03:06What is driving M&A and driving sponsor activity is take privates.
03:11It's up almost 37% year over year, as well as, I'll call it, portfolio restructuring of large corporates.
03:19We did a transaction this week for a large company that split off a division that was non-core.
03:25LBO, B2B, nice company.
03:28That loan price, it's SOFR plus $250, almost at par.
03:34B2B, so that just, again, shows you, yeah, there are big pipelines, and there's a lot coming, but there's a
03:40lot of capital.
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