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News
News in brief
Regulators scrutinise fund loans
Banks are lending more money to private credit managers, private funds and other non-bank financial institutions, prompting regulators and ratings agencies to take a closer look.
“Anytime you have an asset class that’s growing at a rapid rate, it raises concern,” said Brendan Browne, a managing director at S&P Global Ratings. “Bank lending to private funds should be, for the most part, low risk. But banks increasingly want to do this type of lending.”
Loans to non-depository financial institutions, a category that includes private credit funds and a range of financial entities providing services similar to traditional banks without accepting deposits from the general public, have doubled since 2019. They surpassed USD 1 trillion at the end of 2024, according to a report from S&P Global.
Lending to non-banks was one of the fastest-growing categories of lending by banks insured by the Federal Deposit Insurance Corporation (FDIC), a fourth quarter FDIC report shows. The FDIC has asked banks to start reporting lending to this group in greater detail by 30 June 2025.
“The OCC [a US bank regulator] is closely monitoring these credit markets and the potential risks they may pose to banks,” said acting comptroller of the currency Rodney E. Hood in a statement to Creditflux. “As with other emerging risks and growth areas, OCC examiners expect regulated institutions to have appropriate systems and controls in place.”
The massive growth in private credit funds over the last few years has been a driver of non-bank lending, said Thierry Grunspan, director at S&P Global Ratings. These funds need leverage, which is typically provided by the banks.
Ares raises biggest ever European private credit fund
Ares Management’s latest private credit fund closed at a staggering EUR 30bn, a record for European direct lending.
In the Credit Exchange with Lisa Lee podcast, the firm’s co-head of European credit, Mike Dennis, spoke about how investors are excited by opportunities in Europe.
The private credit market should be able to provide EUR 2bn to EUR 3bn worth of unitranche loans in the region, Dennis said, which could increase if borrowers tap multiple currencies in the US and Europe.
He also forecast that these deals will get even bigger in future, but will be done on an opportunistic basis when public markets are closed.
The new Ares fund attracted EUR 17bn in equity commitments.
Top stories on creditflux.com: Acer Tree–Ymer and JPMorgan–Octagon partnerships
27 February
Irradiant’s star investor Maji set to depart as firm is acquired
Debdeep Maji is leaving Irradiant Partners instead of joining its tie-up with Apollo Global Management’s Redding Ridge. Sean Severin, head of CLO investing, will become co-portfolio manager of the third-party equity fund Maji oversaw.
Maji, one of the best-known investors in the CLO space, has been leading Irradiant’s efforts to invest in the liabilities and equity of other managers since joining the Santa Monica-based firm in 2023.
3 February
Acer Tree sees CLO runway with Ymer deal
Acer Tree Investment Management’s partnership with Nordic CLO investor Ymer provides for a minimum of five deals.
6 February
US CLO spreads fall to ‘historically tight’ level
Spreads on triple A paper dipped to their lowest level in the CLO 2.0 era in January. Creditflux data showed it was the busiest January on record for CLO issuance.
10 February
CLO veteran Geoffrey Horton leaves PM role at BlackRock
Horton departed after more than three years working on the global structured credit team.
11 February
Cresset sells private credit portfolio
Private investment firm Cresset sold its private credit assets to StepStone Group — but its private credit team is not joining StepStone or Cresset’s renamed private markets firm, Peakline Partners.
18 February
Private credit CLOs see dramatic drop in spreads
Private credit CLO spreads have fallen to their tightest levels in the post-GFC era as the niche corner of the market sees greater investor acceptance.
20 February
Wellington raises USD 194m for inaugural captive CLO fund
Behemoth US asset manager Wellington Management closed its inaugural CLO equity fund with commitments of USD 194m.
21 February
Ex-Panagram CLO team launch credit manager
After a dramatic departure from Panagram Structured Asset Management, senior members of its CLO team have launched Reckoner Capital Management.
23 February
Redding Ridge acquires Irradiant to become top-five CLO manager
The acquisition consolidates the Apollo associate’s position among the biggest CLO managers. It adds USD 10.7bn of assets.
24 February
JPMorgan teams up with Octagon
The private credit partnership tie-up adds to the burgeoning list of deals between banks and alternative asset managers.
25 February
Alcentra raises USD 1bn to invest in CLOs
Alternative credit manager Alcentra has secured over USD 1bn from institutional investors to invest in CLOs. Most will be invested in other managers’ deals, but USD 165m will support its own issuance in Europe.
26 February
Citigroup’s Jim Hughes departs for TPG Angelo Gordon
Hughes, who has been spearheading Citigroup’s CLO business, is leaving after almost 24 years to join TPG Angelo Gordon.
27 February
CLO banker Rachel Russell leaves Morgan Stanley for Brookfield
The head of global new issues at the bank is leaving to join asset manager Brookfield.
Past returns
All change, all change
Investment banks are undergoing seismic staff changes in their CLO arranging businesses, with old stalwarts decamping after decades in their seats. Citigroup’s Jim Hughes, Morgan Stanley’s Rachel Russell and Barclays’ John Clements (though he only moved over from Citigroup in 2018) have left or are about to part from their respective firms.
Add these moves to the departure of three of JPMorgan’s most senior CLO bankers last year, when Christine Ferris, Anusha Joly and Mussie Tizazu resigned to go to SMBC Nikko, and you have a major changing of the guard.
Points up front
Credit market all singing from optimistic hymn sheet at Aria hotel
The securitisation community descended en masse for the annual February confab in Las Vegas. This time, SFVegas attracted a record 10,000-plus attendees to the halls and meeting rooms of the Aria Resort & Casino, where the mood was ebullient and the champagne flowing.
US CLO participants came to the conference having inked a record number of deals, and brashly forecast more for the rest of the year. The first quarter of 2025 is turning out to be the fifth quarter of 2024, said one CLO manager, as a way of noting the strength of the market and investor demand.
While your correspondent did not see any bankers fist-bumping, she did notice the frantic pace of meetings. CLO managers said they’ve never had so many one-on-ones. While these are a great opportunity to sit with investors who had flown in from around the globe, the sheer number made the days pass in a blur.
Evenings were filled with parties and dinner, often hosted by the banks, while Bardot Brasserie was filled with those who couldn’t wait that long.
But the presidency of Donald Trump could not be ignored. Headlining the conference was NBC’s political analyst Steve Kornacki, who explained secular shifts in voting patterns to a packed room of Wall Street players. Karl Rove and Amy Klobuchar also offered comment.
The Aria area was packed with frantic meetings, dinners and boozy parties during SFVegas
