Private Debt Pain Brings Angst, Opportunity to Milken

-- Private credit managers are bracing for an uptick in stress across corporate America as higher interest rates for longer mean some companies will struggle with their debt loads.Arm Slides as Tepid Outlook Fuels Concerns Over AI Slowdown

While many borrowers are still notching revenue growth and have absorbed the higher rates, the struggles of weaker companies could provide the first real test for a global private credit market that’s grown to $1.7 trillion of assets. Much of that money was raised by managers who started after the financial crisis more than 15 years ago.An economic downturn could become a make-or-break point for some who entered private credit in recent years, according to Blue Owl Capital Inc.

Sponsors are prepared to wait until they can earn their way back to higher valuations before exiting company investments, and are finding willing partners in private credit to help, said Jeffrey Solomon, president at TD Cowen. Europe’s largest supermarket retailer Schwarz Group is set to raise about $1.8 billion through a privately-placed bond sale

UBS Group AG is sounding out investors for an $800 million leveraged loan that will refinance debt from Royal Oak Enterprises, a charcoal maker Materials company Kymera International is in conversations with lenders, including private credit firms, to refinance its debt and pay for a potential acquisition

Source: News Formal (newsformal.com)

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