Bloomberg Invest: Brookfield’s Connor Teskey on State of Private Credit

Описание: Connor Teskey, CEO of Brookfield Asset Management, discusses the state of private credit, how Brookfield is positioning capital amid higher rates, and shifting exit markets. He speaks with Bloomberg’s Tim Stenovec and Carol Massar from the Bloomberg Invest conference in New York City. Gate or not to gate? That’s the dilemma facing managers of the biggest retail-focused business development companies as the clock ticks down on redemption filings that will reveal their scale of contagion to Blue Owl’s woes.
Blackstone tapped some $150 million from more than 25 senior leaders to help it meet record withdrawals from its flagship $82 billion Blackstone Private Credit Fund, in the latest example of shaky sentiment toward the asset class. 
The 7.9% of withdrawals exceeded the 5% quarterly limit typically allowed by funds like BCRED, which offer semi-liquid access to a largely illiquid asset class. Blackstone exercised a right to raise its quarterly offer by an additional two percentage points, and shelled out $250 million of company capital but needed staff to stump up the remaining 0.9% —  or undergo a costly re-tender.
Skittish investors are retreating from several business development companies amid fears the $1.8 trillion private credit sector has lent recklessly to ‘software-as-a-service’ firms threatened by the advent of AI.
Speaking at the Bloomberg Invest event in New York on Tuesday, Brad Marshall, Chairman of BCRED, said the elevated redemptions reflected “a lot of noise” in the market, but the vehicle was “doing what it’s supposed to do,” and private credit continued to attract significant capital from investors big and small.
“You have a portion of the market that is reading the headlines and wants to redeem, and then you have another portion of investors who are actually signing up and subscribing because they believe in the return premium you can get in private credit right now,” he said, pointing to BCRED inflows of around $2 billion in the period.
BCRED has delivered a 9.8% annualized total return since inception for Class I shares. This reflects a 360 basis point premium to leveraged loans, a spokesperson said.
It’s unclear exactly which Blackstone staffers wrote checks to support BCRED but Blackstone CEO Steve Schwarzman has a dollar or two to spare. The billionaire took home $1.24 billion last year, just shy of his record $1.27 billion in 2022. 
He collected $1.1 billion in dividends alone from his roughly 20% stake in the world’s biggest alternative asset manager, according to an annual filing Friday. He earned an additional $125.6 million, mostly through incentive fees and the share of fund profits known as carried interest. Other BDCs likely to see outsized redemptions in the coming weeks will need to decide between enforcing a cap on exits, or meeting excess requests from cash or asset sales. For now at least, funds are pulling out all the stops to avoid becoming the first to gate.   
Gating allows “the fund to actually protect the investor and the fund from the kind of value degradation that can happen in the context of fire sales,” Vivek Bantwal, Goldman Sachs Asset Management’s global co-head of private credit said at the same Bloomberg conference.
Jeffrey Griffiths, global head of private credit at Campbell Lutyens, said more gating on BDCs could actually reassure some retail investors that their interests were being managed in a consistent, transparent manner.
“Within these fund structures, managers want to return capital to investors when it is requested but, most importantly for them, at a strong price that protects their track record. The challenge is achieving pricing at par or at a premium,” he said.
Shares of Blue Owl Capital posted their worst monthly decline on record in February, falling by 23% after the firm shuttered exits from one of its funds and sold off assets to boost liquidity levels. Shares in Ares, Blackstone and Apollo have also shed at least 26% year-to-date, while Blue Owl Technology Finance Corp. fell 16% for the same period, also the wors
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