Bloomberg: Jon Gray on Private Credit
Bloomberg: Jon Gray on Private Credit
Interviewer: What about returns? It had been lauded as the golden age of private credit, but Jon, as rates start to come in, just performance-wise, is it still the golden era?
Jon Gray, Blackstone President & COO: Well, I still think it’s a very good time for private credit. I would acknowledge that as base rates come down and as spreads tighten, some of the very high returns that were achieved being a senior lender in private credit, that’s harder to do, achieving mid-teens returns. But the premium relative to liquid credit, what you get in leverage loans and high yield, that’s enduring because you have this farm-to-table model. You’re bringing investors right up to borrowers and knocking out a bunch of origination and securitization costs. And so I think the key thing is not necessarily the absolute return, but can you deliver a premium return over liquid markets? And that I continue to have very high confidence in. And that’s why I think we’ll continue to see flows into private credit, not just non-investment grade, but investment grade. What we’re seeing with insurance clients, the momentum in that area is pretty remarkable.
Jon Gray, Blackstone President & COO: Well, I still think it’s a very good time for private credit. I would acknowledge that as base rates come down and as spreads tighten, some of the very high returns that were achieved being a senior lender in private credit, that’s harder to do, achieving mid-teens returns. But the premium relative to liquid credit, what you get in leverage loans and high yield, that’s enduring because you have this farm-to-table model. You’re bringing investors right up to borrowers and knocking out a bunch of origination and securitization costs. And so I think the key thing is not necessarily the absolute return, but can you deliver a premium return over liquid markets? And that I continue to have very high confidence in. And that’s why I think we’ll continue to see flows into private credit, not just non-investment grade, but investment grade. What we’re seeing with insurance clients, the momentum in that area is pretty remarkable.