PERE Credit’s Post

Proud of our team at BKM Capital Partners for putting together this insightful white paper on how industrial assets are defying the broader market's interest rate pressures. Despite elevated rates impacting pricing and financing availability, the industrial sector continues to chart its own path. Check out even more insights in this exclusive.

📣 We were delighted to attend the Private Debt Investor conference this week in London, which explored key topics in the private credit market. Our CEO Sabrina Fox spoke on a panel regarding challenges of data reliability and quality, a challenge we have been tackling at ELFA. See below some of our insights, and some of our resources that can be used as guidance to support transparency in the market.  1. Private Credit: An asymmetric asset class for dealing with defaults. Navigating defaults in private credit is complex and varied. Different managers have different strategies, from in-house capabilities to third-party evaluations. So far, these are untested waters. 2. Valuation dilemma for private credit managers: Private credit managers employ various valuation models and timelines, leading to inconsistency. Dive into ELFA's technical guide for insights on navigating valuation challenges which can help with this: https://lnkd.in/d6HFKexw 3. Collaboration or Competition? The relationship between private credit and equity during borrower distress hinges on reputation, asset type, and document flexibility. As more borrowers face difficulties, priorities may shift between relationships and end-investor interests. 4. Green energy transition: Lenders must engage with borrowers strategically during the energy transition - this might be when the borrower needs funding, or if they are growing. More engagement can be done in the private credit space which will help to ensure that the transition to green energy is met. 5. ESG reporting realities: GPs must scrutinize their ESG reporting to convey real impact. ELFA offers workshops and insights to foster consistency and transparency on ESG data, ultimately enhancing their ability to do so. Explore more in ELFA's recent publication, ESG Reporting and Engagement at the LP/GP level for Private Debt Funds - https://lnkd.in/ebyMKuHG #PrivateCredit #ESG #GreenEnergyTransition

. Osaic's plan to acquire $108 billion Lincoln Wealth will have minimal impact on the firm’s debt leverage and interest coverage, according to reports from Moody's Investors Service and Fitch Ratings. The two ratings agencies said their outlook on the wealth management firm’s credit was stable. This follows a similar report from S&P Global Ratings last week, estimating the acquisition will cost Osaic $1.04 billion, factoring in transaction costs and retention loans to Lincoln advisors. http://spr.ly/6041V6LE3 #WealthManagement #mergersandacquisitions

📰 Following our participation to CAMRADATA Real Estate Debt Roundtable in April, we are delighted to announce the release of a Real Estate Debt white paper featuring Pierre Saeli’s insights on the real estate debt market : - Where does real estate debt sit within asset owners’ strategic asset allocation? - How is real estate debt market evolving? - How asset managers integrate ESG considerations into their real estate debt portfolios? 👉 Contact your SCOR Investment Partners' sales representative to access the full version   #realestatedebt #roundtable #whitepaper

answer - asset stripping, crazy debt leveraging and using all of reserves for dividends rather than investment in an aging infrastructure. A masterclass in how not to run a company at every level https://lnkd.in/ecrhT7rJ

In the #emergingmarket space, fixed income issuance in January has been strong. My colleague, Sergey Goncharov from our Fixed Income boutique reviews the month in EM debt with an eye on what’s to come: https://bit.ly/49icKJd #Vontobel #Investing

One of the basic ratios is Debt-to-equity! How are they important? Let's explore! What is it? The debt-to-equity ratio is a measure of the proportion of a company's financing that comes from debt compared to equity. It is calculated by dividing the total debt of a company by its shareholders' equity. Why to use the debt-to-equity ratio? 1) Financial Leverage (How much the company relies on debt financing versus equity financing) 2) Assessment of risk (High debt financing indicates a relatively higher risk) And there are many more reasons to calculate this. When is it used? 1) Used for investment research, financial planning, credit analysis, etc. 2) Additionally, it may be used during due diligence processes for mergers and acquisitions or when seeking financing from lenders or investors. Ratio analysis relies on the dependence on all other ratios as well. Because depending only on one ratio would not help the investor or the organization to make the whole picture out of the data. So in ratio analysis all other related ratios also should be considered. Follow Aswin Raj M for more information! #ratioanalysis #debt #equity #creditanalysis #investment #riskmanagement

Upgrades to Investment Grade Outnumbered Downgrades to Speculative Grade "The net number of crossovers on a past-year basis in Fitch Ratings’ portfolio of global corporates marked an inflection point in the three months ending August 2024. It improved for the first time following eight consecutive quarters of deterioration between 2Q22 and 2Q24. Global upgrades to investment grade outnumbered downgrades to speculative grade by four to zero over the past three months ended August, after four quarters of net downgrades to speculative grade. There were two rising stars in North America (Delta Air Lines Inc; BBB-/Stable, and CrownRock LP), one in Latin America (Nautilus Inkia Holdings SCS) and one in EMEA (State Oil Company of the Azerbaijan Republic; BBB-/Stable). This brought the net number of crossovers in the past 12 months to seven upgrades in North America and two, five and seven downgrades in EMEA, Latin America and APAC, respectively. Since May, we have added four entities to our list of potential fallen angels; rated ‘BBB-/Negative', while two left the list as their ratings were affirmed at 'BBB-' but their Outlooks were revised to Stable, and the rating of another was withdrawn due to commercial reasons. The four new potential fallen angels (Chinese homebuilders Yuexiu Property Company Limited and China Jinmao Holdings Group Limited, US industrial Leggett & Platt Incorporated and India's Tata Steel Limited) represent an aggregate debt balance of USD48 billion. Potential rising stars added to our list include Samvardhana Motherson International Limited and Amkor Technology, Inc (both BB+/Positive). Our lists include 27 potential fallen angels and 16 potential rising stars, representing USD208 billion and USD90 billion in aggregate debt, respectively. Six corporates joined our list of issuers on the cusp of the 'A' and 'BBB' categories since end-May 2024, all rated 'A-/Negative' and at risk of being downgraded to the 'BBB' rating category. These entities have aggregate debt of USD23 billion. There were no additions to the list of entities rated 'BBB+/Positive' in the past three months. Aggregate debt that could migrate to the ‘BBB’ rating category is USD570 billion is significantly higher than the amount of debt that could be upgraded to the ‘A’ category (USD74 billion)." #fitchratings #creditratings #investmentgrade #speculativegrade #risingstarts #fallenangels #ratingactions #crossovers

Listed real estate companies offer a microcosm of the broader market dynamics, with loan-to-value ratios and debt maturities being key indicators of their vulnerability. In a tightening capital environment, those with lower leverage, longer debt maturities, and exposure to growth sectors like industrial real estate, such as Segro, were best positioned to navigate the storm, the opposite is increasingly true in a period of loosening credit conditions. My look at some of the latest balance sheet and financing trends across the listed market: https://lnkd.in/gKJ4-wZi Andrew Teacher Lingard Capital Advisers Limited #realestate #investment #credit #property #commercialproperty Business Post

What's going on with EM Debt? My colleague, Sergrey Goncharov from Fixed Income team, shares his views on #EM #fixedincome: ➡️ January 2024 is shaping up to be a standout month for new issuance of EM debt, compared to the past five years. ➡️ Not only can the strongest credit afford to issue, but we’re seeing a broader array of issuers. ➡️ Lower rates and tighter spreads point to an open market trend with staying power rather than a temporary blip.