Blue Owl executives stated the choice asset supervisor has not seen “any materials pickup in stress” throughout its portfolio through the ‘increased for longer’ fee atmosphere, though it continues to have a small variety of debtors on its watch record.
In an interview with legislation agency Proskauer, Blue Owl vp Erica Wilson and managing director Nicole Drapkin stated that the agency continues to see regular top- and bottom-line progress on each a quarter-on-quarter and year-on-year foundation.
“Our debtors had been properly positioned coming into the previous few years, having efficiently navigated increased rates of interest by rising revenues and profitability, adjusting price constructions and managing money movement and dealing capital the place wanted,” they advised Proskauer accomplice Jessica Shearer and affiliate Hyun Seung Suh.
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“We consider our corporations are faring properly by design, as we now have deliberately invested in massive, high- high quality companies and recession resistant sectors, usually backed by operationally subtle, personal fairness sponsors who’ve massive money fairness investments in these companies.
“Regardless of the upper for longer fee atmosphere, we haven’t seen any materials pickup in stress throughout the throughout the portfolio. We proceed to have a small variety of debtors on our watch record, however this subset has remained comparatively static over the previous couple of quarters.”
Wilson and Drapkin commented on the resilience of personal credit score regardless of the decrease deal quantity of the previous 12 months and stated they had been longing for elevated exercise within the second half of 2024.
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“We additionally consider the ‘increased for longer’ atmosphere will create extra opportunistic financing transactions for corporations which might be respectable performers however have unsustainable steadiness sheets,” the pair remarked.
“These could take the type of extra conventional legal responsibility administration workouts or different extra inventive options with an goal of lowering leverage and/or curiosity expense.”
Additionally they remarked that because the variety of gamers within the personal credit score business expands, “the flexibility to distinguish your choices and supply inventive options has grow to be much more beneficial.”
“Scale is a kind of key differentiators as bigger platforms are likely to have a number of benefits in M&A processes, together with increased high quality groups with in-depth and sector-specialised market information,” they stated.
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