SANNE sponsor and participate in the New York Opalesque Roundtable
Jeff Hahn, Managing Director, Alternative Assets - AMERICAS
Since the financial crisis, alternative credit has gone through a major boom. Pension funds are increasingly making alternative credit a strategic part of their asset allocation, not a tactical or opportunistic one. In a recent survey, alternative credit strategies now account for 7.0% of total assets of pensions.
However at this point, concerns abound about being late in the credit cycle, spread compression and that covenants have never been weaker. We are also starting to see defaults quietly pick up in the direct lending space, but people aren’t really talking about it. Meanwhile, investors are still are desperate for uncorrelated income streams. And so, rather than continuing to allocate to an on the run market, investors may want to analyze what (risks) they have in their portfolio, get away from beta, focus on credit selection and look for niche opportunities and places that can do well even in market shocks. Alternative or private credit can potentially still be an option for that.
The Opalesque ALTERNATIVE CREDIT Roundtable, sponsored by SANNE, took place in New York with:
1. Henry (Hank) D’Alessandro, Managing Director, Head of Morgan Stanley Credit Partners
2. John Steinhardt, Co-CIO & Co-Managing Partner, KLS Diversified Asset Management
3. Egidio (Ed) Robertiello, CFA, CIO & Managing Partner, Blueprint Capital Advisors
4. Jonathan Berger, CEO & CIO, Birch Grove Capital
5. Mark Tecotzky, Partner, Ellington Management Group
6. Brian deLucia, Managing Partner, Arrivato
7. Jeffrey Hahn,Managing Director, Alternative Assets - AMERICAS at SANNE
The group also discussed:
- The top “do's and don'ts” of alt credit investing, sourcing and due diligence and monitoring and risk management.
- Why Morgan Stanley Credit Partners does not participate in the traditional middle to upper middle sponsor leverage loan market
- Opportunities in non-QM mortgages, asset-based lending to retail companies, lower middle market senior loans & the broader private debt market non sponsored companies.
- Risks and limits of the cash advances model. Has the bank disintermediation story ended? What drives alternative credit, private debt from a macro and micro perspective now?
- The benefits of being a value added lender.
- Trends, Outlook & Risks: Canaries in private debt mines?