Mar. 30 at 3:41 PM
Fed Chair Powell says that he’s “not seeing anything too worrisome” in bank lending to places like
$OWL —aligns w/ the Fed’s supervisory view that these exposures are currently manageable, well-collateralized in many cases, & concentrated at large, well-capitalized institutions.
Regulators monitor this channel, & banks have reporting req'ts (e.g., FR Y-14 for stress testing)
Note: Despite headline default rates in the low-to-mid single digits (~2.5%–5.8% depending on source & adj'ts), modestly above long-term norms but not at crisis levels
Stress is uneven, much higher among smaller borrowers (eg; ≤
$25M EBITDA) & certain sectors like software/tech; larger deals & stronger sponsors have seen more contained losses, w/ realized lender losses often limited due to restructurings
However, across broader BDC landscape, redemptions up +217% q/q
--- Currently, more liquidity & redemption pressure issue than full-blown default crisis
Headwinds: AI/SaaS, War, Inflation
$KKR $APO -
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