(Bloomberg) — Lower rates, a hunt for yield and more companies going private and staying that way for longer have all contributed to the huge growth in private credit markets, said Mark Jenkins, the global head of credit at Carlyle Group.
Private credit has increased from roughly $300 billion to more than $1 trillion over the past decade or so, partly fueled by banks retreating from lending, he said. While valuations have risen across the board in all asset classes, especially in equity markets, it’s not a particular worry for lenders.
“That’s a good thing for us from a credit perspective because it gives us a bigger margin of safety for the lending that we’re doing,” he said Tuesday during a Bloomberg Television interview at the Milken Institute Global Conference in Beverly Hills, California.
Oaktree’s Marks Says Son Lectured Him on Bitcoin (12:24 p.m. NY)
Oaktree Capital Management co-founder Howard Marks said his son Andrew, who lived with him during the pandemic lockdown, lectured him daily on dismissing Bitcoin without knowing enough.
“And he was right,” Marks said.
Marks famously criticized Bitcoin and other cryptocurrencies in a 2017 memo. “Nobody has been able to make sense to me of these currencies,” he wrote at the time. “They’re not real!!!!!”
In a memo earlier this year, though, the investor’s tone had shifted. The earlier skepticism “has been a source of much discussion for me and Andrew, who is quite positive on Bitcoin and several others and thankfully owns a meaningful amount for our family.”
Marks Says Distressed Investing Remains ‘Tough’ (11:47 a.m. NY)
Excesses in valuations and availability of cash have made it an unusual time to invest for more than a year, said Oaktree’s Marks.
“It’s tough at the time,” he said about distressed investing in a pandemic-fueled economic cycle.
He was asked how to determine value during a pandemic. “It’s hard to operate in a world where things are worth infinity,” Marks said of assessing companies when they’re growing faster than the discount rate. “It makes it hard on a value investor.”
Minerd Likens Crypto ‘Garbage’ to Dot-Com Bubble (11:07 a.m. NY)
The majority of cryptocurrencies are worthless and will fail, with just a handful of big winners remaining, Guggenheim Partners Chief Investment Officer Scott Minerd said.
Similar to the dot-com boom of the late 1990s, the world of digital currencies will produce some breakout successes like Amazon.com Inc., which went public in 1997, while most of the field will fade away, as Pets.com did, he said.
“Seventy percent of the coins are garbage and will go away,” Minerd said in a Bloomberg Television interview at the event.
Wood, Mnuchin Rank Among Day Two Highlights (10:30 a.m. NY)
The hybrid in-person and virtual conference resumed Tuesday with another busy session. Sandwiched between an early workout at a West Hollywood gym and an afternoon sound-bath meditation, there’s the usual big names on the agenda.
For finance pros, highlights include Ark Investment Management’s Cathie Wood and former Treasury Secretary Steven Mnuchin appearing jointly at 2 p.m. Beverly Hills time (5 p.m. New York).
Junk-bond pioneer and conference namesake Michael Milken is moderating a 10 a.m. panel on credit. “While the share of the riskiest credits is close to an all-time high and inflation worries continue to linger, the future years seem set for borrower-friendly deal terms and search for yield,” is how the agenda describes that gathering. It’s enough to quicken any investment banker’s pulse.
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