(Bloomberg) — Editor’s note: Welcome to Credit Weekly, where Bloomberg’s global reporters will bring you the most interesting stories of the past week while also offering you insight on what to expect in the credit markets for the coming days.
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One of the biggest changes in credit markets in the last decade has been the rise of private debt. That’s where other asset managers like Blackstone, Ares and Apollo make direct loans to companies – often small businesses or with little credit – after traditional banks have pulled back amid the the power to stop their dangerous activities.
Private debt is now a $1.4 million business. It has funded acquisitions by companies such as Stamps.com and data giant Information Resources Inc. Now many of those banks want action again.
The latest is JPMorgan Chase & Co. As Silas Brown and Will Louch of Bloomberg wrote last week, the New York bank has set aside at least $10 billion to reverse its move to private debt. And it is poised to add billions of dollars based on available opportunities.
JPMorgan is certainly not the first big bank to recoup sweet fees and high yields from loans in this space, and it likely won’t be the last.
Preqin, which pursues other assets, expects that private equity assets under management will add nearly another trillion dollars in the next five years to $2.3 million.
Most of that growth is expected not to be driven by borrowers satisfied by banks – small and medium-sized companies – but by loans to large companies. That could affect Wall Street’s earnings business.
“The speed, certainty, privacy, and the ability of some lenders to approve a lot of financing solutions on the basic structure will continue to drive market share for private loans relative to the integrated market, ” said Ken Kencel, CEO of Churchill Asset Management. in a recent Q&A with Preqin.
China’s ailing property sector is getting fresh support. The financial authorities and bad creditors plan to offer as much as 160 billion yuan ($24 billion) in refinancing aid to high-income developers, Bloomberg reported. Meanwhile, units of the two builders sold their first yuan-denominated bonds and troubled peer CIFI Holdings is planning its second offering. after the New Year holiday.
China’s most indebted conglomerate, the China Evergrande Group, is discussing a proposal with creditors that includes two options to extend the repayment period of unsecured foreign debt, it has been reported. by Bloomberg’s Jackie Cai. Credit investors cheered the long-awaited announcement of Fantasia Holdings Group’s proposed restructuring, which includes a debt-to-equity swap.
French billionaire Patrick Drahi’s telecommunications company, Altice France, is looking to buy another time to pay off its debt, offering a e the amendment and expansion of the transaction is about $8.4 billion in loans.
Pacific Investment Management Co. is preparing. begins issuing guaranteed loans in Europe, marking the return of the American investment firm in more than a decade.
UBS analysts are advising investors to buy European debt over U.S. debt amid signs of trouble in the U.S. debt market, a crisis in private debt and a serious downside risk America’s highest debt.
–With assistance from Kevin Kingsbury, Yuling Yang, Silas Brown, Will Louch and Davide Scigliuzzo.
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