00:00That's what's happening in private credit. And I wonder, you know, what the read through from what we're seeing in
00:05pockets of the private credit market, whether or not, you know, that extrapolates into the public markets. And Megan, I
00:13would love to hear your thoughts on the ripple effects, potential ripple effects. So private credit, you know, no arguments.
00:19It's definitely the area of vulnerability this cycle. For now, we see kind of deterioration is moving very slowly and
00:26it doesn't disrupt our overall constructive view on public
00:30markets. And I think you're continuing to see headlines around redemptions. We think that will continue with the BDCs. They
00:37don't have to meet all of the redemption requests. And we think that they will continue to cap those redemptions
00:43as they're permitted to do. I think the good news is so far, why is all of this a risk?
00:49It's because people are worried about software and obsolescence, which Sonali mentioned earlier. What did we learn from earnings? So
00:55far, software, we got good news from earnings. So guidance was pretty good.
00:59People were very forward looking in terms of addressing some concerns of investors. So we don't have that hard evidence
01:06yet that obsolescence is spreading across the software sector. On the contrary. And so for now, we are less worried
01:15and think the risks in private credit are contained in terms of the fundamental piece. Yeah, you talk about that
01:20strength that we've seen in earnings certainly has manifested in the equity markets and in the public credit markets. But
01:26Sonali, the question is still out there. I mean, are you worried about
01:29any potential contagion there? Because at least when you think about, you know, some of these redemption requests, there are
01:35at least liquidity concerns. Yeah, I think what we're seeing so far is a rerating of multiples, right? Deals done
01:40in 2021.
01:41Multiples are coming down considerably. But still at this stage, it does seem a bit idiosyncratic, industry-specific, and not
01:50yet systematic. I think the important piece here, though, is as we see convergence
01:54between the public and private markets from a financing perspective where issuers are having more choice. We are not seeing
02:02convergence from a liquidity perspective, right?
02:05There's a lot of hurdles here to get private credit to be liquid. For example, you know, differences in access
02:13to information, differences from whether the issuer
02:16will approve the transaction to a new buyer. And these are hurdles that mean it's very difficult for it to
02:23become liquid. And I think in this, where we are in
02:25the cycle and the opportunity set ahead, you know, we are favoring having flexibility and liquidity in the portfolio construction.
02:32And I think in this, will be about the
02:32future.
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