Collateralized loan obligations face a second straight year of equity losses, according to Eagle Point Credit Management, a major buyer. “Where we stand right now, it’s certainly possible,” Tom Majewski, the $14 billion private-credit manager’s founder and managing partner, says in this episode of the Credit Edge podcast, when asked about the chance of negative returns. “While there were some credit problems, oddly the bigger issue was the bull market and repricing of loans,” Majewski tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Reto Bachmann. They also discuss software-loan stress, business-development-company turmoil, lower returns in significant risk transfers and how Eagle Point is diversifying into hard assets like midmarket infrastructure lending.<br>See omnystudio.com/listener for privacy information.

Bull Run in Loans Slams CLO Equity Buyers, Says Eagle Point’s Majewski

The Credit Edge by Bloomberg Intelligence

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Hello, welcome to The Credit Edge, a weekly markets podcast. My name is James Crombie. I'm a senior editor at Bloomberg.

And I am Reto Backman, Chief Structured Finance Strategist at Bloomberg Intelligence. This week, we are very pleased to welcome Tom Majewski, founder of Eagle Point Credit, their $14 billion credit credit manager. How are you, Tom? Doing very well. Thank you. Tom set up Eagle Point in 2012, turning it into one of the world's largest CLO equity investors. The firm has also expanded to specialty finance, significant risk transfers and infrastructure credit, as well as other opportunities. So lots to discuss there. Let's start with software.

You buy loans to software companies. That sector is under a lot of pressure. The fear is that a lot of the businesses will be replaced by AI and that the assets underlying the debt are actually worthless. Loan prices fell a lot at the start of the year as the AI story really took off. They've recovered a little bit. But the debt market still seems to be telling us that there's a big problem. Where do we go from here? The concerns are fair. The timing may be subject to question, in my opinion.

Bull Run in Loans Slams CLO Equity Buyers, Says Eagle Point’s Majewski

Read the full transcript

The candid version is on a podcast,
not the earnings call.

Bull Run in Loans Slams CLO Equity Buyers, Says Eagle Point’s Majewski

Read the full transcript

The candid version is on a podcast, not the earnings call.

The candid version is on a podcast,
not the earnings call.