00:00Joining us now is Bloomberg senior reporter Silas Brown. Silas, is that all this is? People trying to game the
00:05system and time their withdrawals to jump to the front of the queue and ask for more money out?
00:10Well, I think I think the most notable thing in the second quarter is we're starting to see what's really
00:15going on here, which is that the leading private credit players, the ones that have benefited most from the from
00:22the rise of interest in from retail retail customers are the ones that are most vulnerable in this moment of
00:29angst.
00:29And so you see Apollo, the likes of Apollo, Blackstone, Cliffwater, the ones that have really kind of generated the
00:35most amount of interest among retail.
00:38They're the ones that have attracted the hot money. And actually the smaller BDCs have had much limit, much more
00:43limited redemption or like much more limited outflows from from that from that segment.
00:49And I think that that kind of dynamic is playing out quite neatly in the in the second quarter so
00:53far. This is a story by Laura Benitez and Olivia Fishlow.
00:58And it's well done. But I wonder at some point, do we just flash a headline and put out a
01:05BFW when redemptions are higher than the five percent where they're gated?
01:10Because this is just going to keep happening, right? Yeah, I mean, I think I speak on behalf of many
01:16of the print journalists.
01:16I think maybe we would be spending our time best spent elsewhere if we if we did that.
01:22And yeah, like, look, I think I think the thing is the thing also to note with the second quarter
01:26and the reason why I wasn't necessarily bowled over in terms of surprise as to the as to the numbers.
01:32Now is that the redemptions that are occurring now. People were trying to redeem their capital right at the height
01:39of the kind of angst around software and AI, say, two or three months ago.
01:43And so I think it's totally understandable that that that there will be a kind of elevated amount of redemptions
01:48this quarter.
01:48I think next quarter is the one to watch, because if if they keep on creeping higher, that I think
01:55becomes much more of a sort of systemic problem, although there's no evidence to suggest that that's the case so
02:00far.
02:00It is pretty remarkable to look, though, at all these shares selling off. I mean, that's Aries right there. That's
02:06falling on this. It's Apollo that's falling on this.
02:08And they love to talk about Silas, this idea that this is such a small sliver of the entire universe
02:12of what they manage.
02:14Is that the case for all of these private capital giants? Are there any in particular that are quite exposed
02:20to retail money flooding out?
02:23Sorry, which are less exposed or more exposed?
02:25Or, I mean, I suppose more exposed because all these giants argue that they're not that exposed.
02:31Well, yeah, I know. I mean, I know. I mean, it's very much in their interest to kind of downplay
02:36the level of retail cash that they have that they have at the moment.
02:39And I think to a certain, you know, places like Apollo, it is a kind of very small portion of
02:44their asset base.
02:45Other firms like Blue Owl that have kind of risen much later in the day, I mean, are more dependent
02:54on retail cash.
02:56So, yeah, I mean, I think people are trying to – people have firmly established now what I think they
03:01have always known,
03:02which is retail is flightier than institutional.
03:05And I think when we speak to fund managers – and I'm sure, Danny, you know, you have the same
03:11conversations –
03:11like they still say that institutional capital is kind of flowing through into the market and it's more business as
03:17usual on that segment.
03:19The retail and particularly the kind of hot money retail accounts from parts of Asia, but also kind of accounts
03:25through the RIA community within the U.S.
03:29I think they're the ones that are kind of most capricious when it comes to private credit.
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