The 'flashing red lights' that were ignored

Retail, ABF and diversification – key takeaways from the PDI Europe Summit

Private Debt Investor’s Europe Summit brings together leading industry figures for two days of networking and panel discussions, where artificial intelligence, the democratisation of private markets and the rise of asset-based lending were among the key targets for analysis. In this episode, PEI Group’s special projects editor Hannah Roberts speaks with Private Debt Investor editor Andy Thomson and news editor John Bakie to provide further insight into these agenda-setting topics and examine where the market may be headed next.

How the sustainability-linked loan market is evolving

Having shot to prominence in the early part of this decade, have sustainability-linked loans (or SLLs) become an enduring part of the private credit landscape? Or have they quietly gone out of fashion? In this special edition of the podcast, co-hosted with PEI Group affiliate publication New Private Markets, we seek to chart the rise of sustainability-linked loans and assess how they are being used today. To recap: these loans feature a margin ratchet whereby the borrower’s performance against certain sustainability targets can result in a lower interest rate in the case of outperformance, or an increase in the case of underperformance. To help us assess the situation, we enlisted Nishan Srinivasan, head of origination and partner at Ambienta Credit. Since its inception in 2007, Ambienta has invested in companies operating in the realms of environmental and resource efficiency. Srinivasan spent 22 years at Credit Suisse, latterly as global co-head of leverage finance origination. He joined Ambienta in 2023 to help launch its credit platform. In the early days of SLLs it was not uncommon to see ratchets of 5 basis points relating to sustainability goals that were easily achievable, says Srinivasan. “Typically this was, dare I say, window dressing,” he said. “Quite de minimis in the context of the cost of the loan”. Fast forward to today and the targets are more ambitious, the discounts more meaningful – as much as 40bps – and there is more frequently a margin uplift in the event of failure.

The 'flashing red lights' that were ignored

In this episode, we examine some headline-grabbing company failures such as First Brands, Tricolor and Carriox – and ponder what lessons and insights there might be for the private debt asset class. While private debt exposure may have been relatively limited in these instances, can the asset class be confident that it has its own house in order? Jiri Krol of the Alternative Investment Management Association and Alternative Credit Council acknowledges there is stress in the system – but believes that stress may have already peaked and that, in general, private debt has once again demonstrated its resilience in tough times. But Matthias Kirchgaessner of Plexus Research is not convinced that private debt is immune from concerns around troubled companies, with fierce competition among lenders meaning that some due diligence shortcuts may have been taken.

The diversification dilemma: Why ABF offers a solution to LPs

This episode is sponsored by Rithm Capital Asset-based finance is rapidly evolving within the world of private credit, offering investors a differentiated source of risk-adjusted returns. With the market valued at over $20 trillion, it underscores the vast scale and growing importance of this segment as investors seek alternative opportunities amid shifting economic conditions. In this episode, we speak to Michael Nierenberg, CEO of Rithm Capital, to discuss why asset-based finance is becoming more popular with investors. We analyse the opportunities ABF brings, while also exploring how managers are differentiating themselves in a competitive market.

Private debt’s show of strength

This episode is sponsored by Nuveen The private debt industry continues to go from strength to strength, with several key segments of the market gaining further traction with institutional investors as they seek out strong returns in an uncertain macroeconomic environment. Both geography and strategy will be crucial to attract LPs in the coming months and years - Europe and the US each have significant market factors at play that will determine the trajectory and rate of private credit growth across both markets, while the infrastructure-focused investment-grade space is seeing strong dealflow despite volatility. In this episode, we speak to Randy Schwimmer, vice chairman and chief investment strategist at Churchill Asset Management; Laura Parrott, a senior managing director and head of the private fixed income group at Nuveen; and Michael Massarano, a partner and deputy CIO of Arcmont Asset Management, to find out more about the dynamics driving private debt activity across these three key segments.