🎥 Oak Hill Advisors' Eric Muller - operating at the intersection of public and private credit: live from iCapital Connect

Welcome back to the Alt Goes Mainstream podcast.We were live from AGM’s RIA Field Trip at Brookfield’s New York office at Brookfield Place with Oaktree Managing Director and Co-Portfolio Manager Danielle Poli to unpack why private credit is at a crossroads and why dispersion is growing.Danielle has a unique perch to form a developed view on the current state of private credit. She sits at the intersection of public and private credit, providing her with perspectives on where opportunities and risks lie across the liquidity spectrum.Danielle is a founding member of Oaktree’s Global Credit strategy and its Investment Committee, which was established in 2017. She’s been an important contributor to its growth into a scaled multi-asset credit platform. She previously led Oaktree’s product specialist group, which she helped build into a global team supporting credit, private equity, and real estate. She joined Oaktree in 201 and has nearly two decades of experience in private markets. She has been named to Barron’s list of the 100 Most Influential Women in U.S. Finance.Danielle and I had a fascinating conversation about the current state of private credit, where cracks might be emerging and where to find pockets of opportunity amid the dislocations. We covered:Why is boring beautiful in private credit?Where are we in the credit cycle?Why it’s important to have a contrarian mindset.Where, why, and how dispersion is rising in credit.How to underwrite software investments post-AI.Why asset-backed finance can be a diversifier.Why now could be the time to prepare for opportunistic and rescue lending opportunities, as maturities are fast approaching.How to balance public and private credit investing.Thanks, Danielle, for sharing your wisdom, expertise, and passion about private credit.Thanks for reading Alt Goes Mainstream! Subscribe for free to receive new posts and support my work - writing and podcasting about the convergence of private markets and private wealth since December 2020.A word from AGM podcast sponsor, Ultimus Fund SolutionsThis episode of Alt Goes Mainstream is brought to you by Ultimus, the full-service fund administrator and transfer agent powering asset managers in private and public markets. As alts go mainstream, you need real expertise to handle complex fund structures, connect with key distribution partners, and handle sophisticated compliance, reporting, and transparency demands.That’s Ultimus: high-tech, high-touch solutions for over 450 clients and 2,500 funds with $775B in assets under administration. Backed by an expert team of over 1,200 employees, they place client service at the core of their business, helping you navigate complexity during your fund structuring or launch and then supporting you through every stage of growth. Whether you’re already in the market or thinking about entering private wealth, you can trust their team’s deep expertise in retail alternatives to help you reach your goals.Learn more: ultimusfundsolutions.com or email [email protected] thank Ultimus for their support of alts going mainstream.Show Notes00:00 Live Podcast Intro00:17 Contrarian Mindset00:34 Intro to our Sponsor, Ultimus Fund Solutions01:51 Where Private Credit Stands Today02:13 Market Testing And Bifurcation02:34 Private Credit Evolves Beyond Corporate03:33 Danielle Poli Background04:23 Why Liquidity Matters Now04:49 Dislocation And Price Discovery04:59 Structuring Power In Private Markets05:22 Risk Return And Spread Compression05:51 Paid For Illiquidity Plus Covenants06:16 Asset-Backed Finance Diversifier06:52 Corporate Vs Asset-Backed Underwriting07:20 Why Ring-Fenced Cash Flows Win07:51 How Allocators Fund ABF08:11 Credit Taking Share From Equities09:12 Tough Direct Lending Vintages09:49 Rates Shock And Leverage Reality10:10 AI Disrupts Software Credit11:09 Oaktree Underweight Software12:32 Underwriting Software Post AI13:31 Inside The Investment Committee14:35 Selling Rallies And Staying Humble15:07 Busted Converts Playbook15:55 Liquid Credit Helps Private Discipline17:07 Why Do Both Public And Private17:40 Transparency And Extend or Pretend18:58 PIK Interest Red Flags19:58 Stress Under The Surface20:14 Triple C Spreads And Maturity Wall21:27 Why Dispersion Is Rising21:55 Risk Migrates To Loans And Private23:00 Oaktree Contrarian Playbook23:22 Complacency Vs Real Tailwinds24:34 Brookfield Platform AI Insights25:40 Exuberant Financing Warning Signs26:28 Equity Vs Credit For AI Buildout27:10 Allocating Between Equity And Credit27:52 Valuations Signal Lower Equity Returns29:14 What CIOs Should Tell Clients30:00 Rescue Lending Opportunity Ahead31:39 Signals And Timing The Cycle32:04 Hybrid Products And Barbell Allocations32:36 Core Income Plus ABF Deals33:06 Memo Title - Boring Is Beautiful34:30 Closing Thanks And OutroJoin over 16,600 Substack subscribers & followers and 44,000 LinkedIn and podcast followers who are thought leaders and executives from top private markets firms and wealth management like Blackstone, Apollo, Ares, KKR, EQT, Carlyle, Blue Owl, CVC, TPG, Brookfield, Vista, Goldman Sachs, J.P. Morgan, BlackRock, Fidelity, iCapital, Franklin Templeton, Nuveen, Hg, Permira, Stonepeak, Hamilton Lane, StepStone, Partners Group, General Atlantic, Hightower, Focus Financial, Corient, Cerity Partners, and more. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit altgoesmainstream.substack.com