🎥 Oaktree's Danielle Poli - private credit: "boring is beautiful" - live from AGM's RIA Field Trip

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 Solutions This 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]. We thank Ultimus for their support of alts going mainstream. Show Notes 00:00 Live Podcast Intro 00:17 Contrarian Mindset 00:34 Intro to our Sponsor, Ultimus Fund Solutions 01:51 Where Private Credit Stands Today 02:13 Market Testing And Bifurcation 02:34 Private Credit Evolves Beyond Corporate 03:33 Danielle Poli Background 04:23 Why Liquidity Matters Now 04:49 Dislocation And Price Discovery 04:59 Structuring Power In Private Markets 05:22 Risk Return And Spread Compression 05:51 Paid For Illiquidity Plus Covenants 06:16 Asset-Backed Finance Diversifier 06:52 Corporate Vs Asset-Backed Underwriting 07:20 Why Ring-Fenced Cash Flows Win 07:51 How Allocators Fund ABF 08:11 Credit Taking Share From Equities 09:12 Tough Direct Lending Vintages 09:49 Rates Shock And Leverage Reality 10:10 AI Disrupts Software Credit 11:09 Oaktree Underweight Software 12:32 Underwriting Software Post AI 13:31 Inside The Investment Committee 14:35 Selling Rallies And Staying Humble 15:07 Busted Converts Playbook 15:55 Liquid Credit Helps Private Discipline 17:07 Why Do Both Public And Private 17:40 Transparency And Extend or Pretend 18:58 PIK Interest Red Flags 19:58 Stress Under The Surface 20:14 Triple C Spreads And Maturity Wall 21:27 Why Dispersion Is Rising 21:55 Risk Migrates To Loans And Private 23:00 Oaktree Contrarian Playbook 23:22 Complacency Vs Real Tailwinds 24:34 Brookfield Platform AI Insights 25:40 Exuberant Financing Warning Signs 26:28 Equity Vs Credit For AI Buildout 27:10 Allocating Between Equity And Credit 27:52 Valuations Signal Lower Equity Returns 29:14 What CIOs Should Tell Clients 30:00 Rescue Lending Opportunity Ahead 31:39 Signals And Timing The Cycle 32:04 Hybrid Products And Barbell Allocations 32:36 Core Income Plus ABF Deals 33:06 Memo Title - Boring Is Beautiful 34:30 Closing Thanks And Outro Join 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