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News
News in brief
Blackstone plays offense amid volatility
While many in the market took a pause following the Trump Administration’s wide-reaching tariff plans in April, Blackstone leaned in.
The world’s largest alternative asset manager traded more than USD 5bn in liquid credit within seven or eight days and led some of the largest private credit deals in the market amid the uncertainty.
“When we see this volatility, [we] stick with the themes, stick with the fundamentals that have been working for us and look to play offense where volatility creates opportunity,” said Michael Zawadzki, global CIO for Blackstone Credit and Insurance.
The manager countered the natural instinct to become defensive and instead scanned the market for mispriced assets to buy off the back of volatility, Zawadzki said on the 2 May episode of the Credit Exchange podcast, hosted by Lisa Lee.
Any time the market faces dislocation, liquid assets move first to create immediate opportunities. As the market digested the tariff announcements, spreads widened in the public credit markets and allowed Blackstone to step in. The firm took advantage, using the sell-off to buy what the firm saw as par assets at a discount.
With new money deals, Zawadzki believes there may be a repeat of 2023, during which spreads pushed wide and leveraged buyout financing deals fell into the hands of direct lenders.
The alternative manager has already stepped up on a few deals, financing the buyout of the Jeppesen navigation unit from Boeing, as banks in the broadly syndicated market held back to evaluate the new landscape.
Managers push private credit secondaries to boost private wealth liquidity
Alternative asset managers have begun offering private credit secondaries — the buying and selling of stakes in existing funds — to wealthy individual investors. The move is a quick expansion for a product that was considered a niche investment even among institutional clients until recently.
“There has been an ever-growing interest and demand for alternative assets from private wealth channels,” said Fadi Samman, partner at Akin Gump. “I think the increase of products for private wealth channels in credit secondaries aligns with the interest in such products in credit generally.”
Coller launched Coller Private Credit Secondaries in October, a fund seeded with USD 250m and eligible to private wealth investors outside the US.
In the same month, Pantheon Ventures created a new private credit secondaries fund targeting private wealth investors across Europe, the Middle East, Africa, Latin America, Asia Pacific and Australia. Six months earlier, Pantheon partnered with AMG to launch a private credit secondaries product, seeded with more than USD 435m, for the US private wealth market.
Individual investors tend to want more liquidity than institutional clients and dislike locking up capital, leading managers to create funds that are evergreen or open-ended with opportunities to exit some investments during certain periods. Private credit secondaries have been a natural fit for these structures.
“It feels like an asset class that is just extremely well suited for wealth channels,” said Greg Ciesielski, managing director at HarbourVest.
Apollo launches CLO program to repackage large direct lending loans
Apollo Global Management, one of the titan private credit shops, has launched a new CLO program to repackage its large direct lending loans. The inaugural CLO issued in April, forging ahead despite the surge in volatility.
“While this issuance represents the first time we are offering exposure to our large cap direct lending strategy to CLO investors, most are very familiar with our broader platform and the product, so investor conversations were very constructive,” said Erik Gobbo, Apollo principal and head of investor relations for Redding Ridge Asset Management.
Managed by Apollo Debt Solutions, the CLO priced in line with those of established, tier-one managers, with triple As clearing at SOFR plus 167bps. “The underlying large cap direct origination product was a notable factor driving the robust investor demand we received,” added Gobbo.
Apollo’s new program trails peers such as Blackstone and Blue Owl, which have been putting their large direct lending loans into CLOs for years. Mainly this is because Apollo’s BDC was only set up in 2022.
There is still plenty of collateral for the CLO team. Apollo has USD 63bn of direct lending assets under management. Even during the April volatility, while leveraged finance capital markets were drying up, Apollo led the USD 4bn unitranche financing to back private equity firm Thoma Bravo’s buyout of Boeing’s Jeppesen navigation unit.
While this is the first pricing for Apollo Debt Solutions, the firm is already a significant presence in CLOs.
Top stories on creditflux.com: US tariffs and European risk retention hit the markets
1 April
Dechert adds Paul Hastings partner to boost credit offering
Dechert hired Brian Whaley as a partner in its global finance group to bolster the firm’s private credit and CLO business. Whaley has advised underwriters, issuers and asset managers on a variety of asset-backed securities transactions.
Whaley: Dechert’s new man is based in New York. He was formerly a partner at Paul Hastings
3 April
US CLO and leveraged loan markets roiled by Trump tariffs
The markets were rocked by fears President Donald Trump’s higher-than-expected tariffs would cause a recession.
4 April
European CLO market scrambles to comply with new regulations on risk retention
The European CLO market was shocked by a significant change to the equity requirements for CLO issuance.
7 April
US CLO market on pause as traders seek bottom
In the wake of the Trump administration’s tariff regime, active deals were paused and trading was limited.
7 April
European CLO market braces for slowdown amid tariff fallout
Donald Trump’s tariff hikes caused Euro CLO spreads to widen. New deal activity was expected to slow dramatically.
10 April
Global market stabilises after Trump tariff reversal
Following President Trump’s walking back of his tariff agenda on 9 April, the CLO market adopted a wait-and-see approach.
11 April
SMBC’s new CLO bankers kick off with ‘print-and-sprint’ deal for Elmwood
The team arranged a print-and-sprint CLO for Elmwood Asset Management to take advantage of low leveraged loan prices. Elmwood CLO 41 priced on 17 April.
15 April
Regulators seek to calm European CLO market
The joint European Supervisory Authorities (ESAs) said transactions priced prior to 31 March were grandfathered in under the previous interpretation.
17 April
Managers seek to issue deals quickly
Along with Elmwood, Blackstone and BlackRock were among a handful of managers trying to take advantage of discounted leveraged loan prices.
21 April
Tariffs will increase defaults — Blackstone
As tariff negotiations between the US and trading partners dragged on, Blackstone predicted a rise in defaults. But it said the private credit market has grown large enough to support corporate borrowers through a dislocation.
22 April
Cliffwater aims for more than USD 10bn in private credit co-investments
The manager of the largest private credit interval fund in the US is planning to deploy its flagship direct lending interval fund.
29 April
Mid-market PE firm is newest CLO manager
Kohlberg & Co priced its inaugural deal — the USD 402m mid-market transaction Kohlberg Credit CLO 2025-1 — via Scotiabank.
1 May
DWS axes Euro CLO management plans
Asset manager DWS has abandoned plans to enter European CLO management and shifted focus to private credit.
Past returns
The ups and down of JAAA
Less than a year ago, we noted that the dramatic growth of a new type of CLO investor had the potential to change the dynamics of the market. CLO ETFs took a tumble in April and got their first serious testing.
Janus Henderson’s JAAA had a breath-taking growth trajectory in 2024 and the start of 2025. Even after a decline of over USD 500m in March, it was still at USD 21.22bn. But in April, following President Trump’s tariffs announcement, the ETF saw more than USD 1bn of outflows in three sessions. JAAA has steadied since. The ETF held USD 20.18bn on 6 May.
Points up front
Milken attendees cautiously upbeat in cloudy LA
Financial titans, political, tech and healthcare leaders, and royalty, descended from all corners of the world into a not-so-sunny Los Angeles for the annual Milken Institute Global Conference, hoping for clarity. They would leave without a clear vision of the economic future but cautiously optimistic — a mood of cloudy with a chance of sunshine.
One institutional investor attending said he appreciated hearing from his peers and thought leaders, but still felt “every day is a new day”, when it comes to the Trump administration’s US economic policy plans. The amount of conversations about liquidity is bad news and the selling of secondaries from endowments and foundations is an indicator of stress, an alternatives manager added.
But a banker on a rooftop party said he felt President Trump had “blinked”, and was responding to recent market movements. He added that any default fears would dissipate when the administration inevitably walks back its aggressive tariff plans. More than one attendee still held out hope that M&A volumes would return later in 2025.
Outside of debates about the uncertain economic future of the US (and the world), our reporters spotted both David Rubenstein and Steven Mnuchin on the ground, folks in suits picking up puppies and a hologram of Michael Milken dancing through the uncertainty.
Economic uncertainty and actual clouds threatened to rain on the financial industry’s premier conference — but hey, puppies!
