The NAVigator
268 episodes - English - Latest episode: 16 days ago - ★★★★★ - 5 ratingsThe NAVigator, from the Active Investment Company Alliance (AICA), talks all-weather investing and “excellence beyond indexing” through the use of closed-end funds (CEFs) & business-development companies (BDCs). AICA – a new organization that includes a diverse constituency that runs from investors through fund sponsors – aims to help investors & advisors plot a new and different course to financial success, via the tactical use of securities that mix active management within listed & non-listed structures. Subscribe now to get regular updates on everything you need to know to succeed with CEFs & BDCs.
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Episodes
John Cole Scott on BDCs vs. private credit funds, AI impacting money management, and more
June 28, 2024 14:25 - 11 minutes - 11.3 MBJohn Cole Scott, President of Closed-End Fund Advisors and Chairman of the Active Investment Company Alliance, shares takeaways from a recent industry conference focused on business development companies (BDCs). He talks about how BDCs compare to private credit funds, how the market is changing, and how some money managers are using artificial intelligence to get better information on market trends that could help them pick better investments or improve timing on the trades they make.
VettaFi's Islam on the highs and lows of applying rules to CEF investing
June 21, 2024 15:52 - 9 minutes - 9.11 MBRoxanna Islam, Head of Sector and Industry Research at VettaFi, discusses the benefits and flaws of applying rules-based investing to closed-end funds. She notes that changes in the industry have forced changes on a rules-guided index of closed-end funds created by VettaFi, and how that is impacting the holdings and asset allocation of the fund-of-funds that some investors are using instead of building their own portfolio of individual closed-end strategies.
When the industry tries to narrow discounts, 'that's good for all of us'
June 14, 2024 13:51 - 11 minutes - 11.2 MBRob Shaker, Portfolio Manager at Shaker Financial Services, says that economic conditions — the debt-ceiling debate, troubled banks, higher interest rates and persistent inflation — have created a situation where the market isn’t climbing the proverbial wall of worry, but rather a ‘Wall of Meh.’ However, he adds that there is opportunity in the unimpressive current conditions, noting that long-term investors in closed-end funds can use lagging investor sentiment to capture discounts as early...
Nuveen's Dave Lamb on how fund firms are reacting to increased activism
June 07, 2024 15:07 - 13 minutes - 12.7 MBDave Lamb, Head of Closed-End Funds at Nuveen, says there is a "much more aggressive form of activism today than what we saw years ago," and notes that it's driven entirely by discount-arbitrage opportunities rather than whether a fund is underperforming due to management decision-making. With discounts at wide levels — particularly for fixed-income funds — sponsors like Nuveen are taking more steps to cut the gap and reduce their funds' attractiveness to activists. Lamb discusses Nuveen's s...
John Cole Scott on new trends reshaping closed-end funds
May 31, 2024 14:52 - 13 minutes - 12.9 MBJohn Cole Scott, President of Closed-End Fund Advisors and Chairman of the Active Investment Company Alliance, talks about the good and bad in recent industry developments. For example, Scott discusses how fund sponsors are taking steps to keep a lid on discounts, potentially reducing a fund's attractiveness to activist investors. He also highlights the trend towards managed payouts and how investors should size up distributions that might be connected more to marketing materials than to wha...
BlackRock's Minar on how the firm is changing discount plays
May 24, 2024 13:26 - 12 minutes - 12.3 MBStephen Minar, Managing Director and Head of Closed-End Funds at BlackRock, discusses a contemporary conundrum in the closed-end fund industry: How discounts drive money flows into closed-end funds but also attract activist investors whose actions may be harmful to long-term individual investors. To address this, Minar notes that BlackRock has launched initiatives in a series of new funds that can reduce discounts, thereby making a fund less likely to attract activists, while increasing cons...
Sizemore: "The Fed's actions have changed, but the discounts remain"
May 17, 2024 13:23 - 13 minutes - 12.6 MBCharles Lewis Sizemore, chief investment officer at Sizemore Capital Management, says that while short-term rates are as high as they are likely to be, the "massive discount" created in closed-end funds while rates were on the rise have not dissipated. That means closed-end funds remain a compelling value now, and Sizemore said he is finding particularly strong values in REIT-oriented funds and term funds. However, he noted that he's not a big fan of most equity-based funds now because with ...
Angel Oak's Triick says mortgages are in a fixed-income sweet spot now
May 10, 2024 15:27 - 13 minutes - 12.4 MBClayton Triick, Head of Portfolio Management, Public Strategies at Angel Oak Capital Advisors — part of the team running the Angel Oak Strategic Credit Fund — says that fundamentals and valuations seldom get aligned the way they have right now for the U.S. housing market and American homeowners. He notes that valuations are "cheaper than they should be" given the strength of the market and mortgage holders, creating opportunity. Triick says homeowners "did a really good job of locking in low...
Liberty Street's Munafo on opportunities in late-stage private venture
May 03, 2024 11:00 - 14 minutes - 13.4 MBChristian Munafo, Chief Investment Officer at Liberty Street Advisors, which runs the Private Shares Fund, discusses how late-stage private venture companies are generating a huge chunk of economic power off most investors' radar. He says now is the time for many investors to pursue the opportunity, coming off of two years in which private shares struggled and markets for taking those companies public stalled. Munafo believes the recent pickup in IPOs is a positive sign. He also discusses De...
Liberty Street's Munafo on the opportunities in late-stage private venture now
May 03, 2024 11:00 - 14 minutes - 13.4 MBChristian Munafo, Chief Investment Officer at Liberty Street Advisors -- which runs the Private Shares Fund -- discusses how late-stage private venture companies are generating a huge chunk of economic power that occurs off the radar screen for most investors. He says the time is right for many investors to pursue the opportunity now, coming off of two years in which private shares have struggled, and the market for taking those companies public has been sluggish. Munafo believes the recent ...
Abrdn's Mondillo: Record discounts plus solid yields should pay off for muni investors
April 26, 2024 13:40 - 10 minutes - 10.6 MBJonathan Mondillo, head of North American fixed income for abrdn says that record discount levels for municipal bond closed-end funds, coupled with attractive yields on those funds, are creating real opportunities for investors, though he warns about the middle of the yield curve, noting that the most compelling values are at the two ends of the barbell -- the short-term and long-duration paper -- which he expects to continue even as the rate cycle plays out and the Federal Reserve finally m...
John Cole Scott gives his first take on 2024
April 19, 2024 12:00 - 12 minutes - 12 MBJohn Cole Scott, President of Closed-End Fund Advisors and Chairman of the Active Investment Company Alliance, drills into the first-quarter data for closed-end funds. He notes that while municipal-bond funds still couldn't break out of their long-running slump, the first three months were a strong time for most closed-end funds (more than 90 percent were up for the period).
Sit's Doty says meaningful rate cuts aren't coming until 2025
April 12, 2024 13:49 - 13 minutes - 12.8 MBBryce Doty, Senior Portfolio Manager at Sit Investment Associates, says the uptick in inflation is not enough to overwhelm the yields investors are earning, noting that real returns may be better than ever. He says investors should enjoy collecting the high yields while interest rates remain high, and while total returns should improve once cuts start, investors will have to wait for that to happen. Doty does not expect meaningful rate cuts this year -- he anticipates two reductions, one aft...
Allspring's de Silva says U.S. still has the world's best income opportunities
April 05, 2024 14:07 - 10 minutes - 10.1 MBHarin de Silva, manager of the Allspring Global Dividend Opportunity fund, says that the U.S. markets have remained among the best income-generating investment opportunities when it comes to the yields being generated relative to the risks being taken. While he favors a global allocation, de Silva noted that the fund has a surprising tilt toward the United States, helped along by the low volatility levels due to the strength of the U.S. economy. Globally, however, de Silva notes that the big...
What struggles in the BDC market portend in a changing rate cycle
March 28, 2024 14:12 - 9 minutes - 9 MBNicholas Marshi, editor at the BDC Reporter, talks about the struggles business development companies (BDCs) had at the end of 2023, saying he was shocked to see that more than a third of the BDCs his publication tracks were "performing below ... reasonable expectations regarding their key metrics." He says that troubles tend to spiral for a few quarters before they get sorted out. Marshi also notes that no BDC has cut dividends yet, leaving "a really wide disparity of value between the BDC...
Axel Merk on the broader impact of an activist investor's approach
March 22, 2024 13:20 - 14 minutes - 14.1 MBAxel Merk, chief investment officer of the ASA Gold and Precious Metals, discusses the impact that Saba Capital Management is having on the fund and on shareholders as it entered the fund as an activist, moving to change the board as it pushes for a double-digit discount to be narrowed. Merk discusses the challenge of dealing with activist investors in a junior mining fund, the potential for the fund to be liquidated, the possible outcomes and the impact of the action on shareholders.
abrdn's Omstead says the recent healthcare rally is just a start
March 15, 2024 13:50 - 11 minutes - 11.1 MBDan Omstead, global head of health care investments at abrdn -- part of the team running the firm's Healthcare Investors, Life Science Investors, Healthcare Opportunities and World Healthcare funds -- says that after several years of struggling, the recent rally in health care and biotech is significant, the start of a positive trend that should be able to withstand the pressures of an election year to keep running higher from here. Omstead identifies a few areas -- most notably the GLP-1 we...
Tough times for commercial real estate are making debt deals attractive
March 08, 2024 12:28 - 11 minutes - 10.7 MBCory Johnson, chief executive officer at Pender Capital -- which runs the Pender Capital Real Estate Credit Fund, a closed-end debt interval fund -- says that there's "an abundance of very interesting opportunities" as the commercial real estate market goes through big changes as regional banks pull back from the sector and reduce liquidity for borrowers. The result is "a kind of a hey day ... the most attractive risk-adjusted yields we have seen since the financial crisis [of 2009], borrowe...
Calamos' Kaufman on launching a new ETF of closed-end funds now
March 01, 2024 15:37 - 13 minutes - 12.7 MBMatt Kaufman, head of ETFs at Calamos Investments, says that years of experience running separately managed accounts of closed-end funds plus the firm's experience running closed-end funds -- as well as an investment environment where a fund that focuses on discounts had lots of investment prospects -- were part of the firm's thinking behind its new Calamos Closed-End Fund income and Arbitrage ETF which launched in January. While the fund is shopping for discounts in closed-end funds that a...
Examining BDCs and muni funds, and deciding between the two
February 23, 2024 15:26 - 9 minutes - 9.48 MBJohn Cole Scott, president of Closed-End Fund Advisors -- chairman of the Active Investment Company Alliance -- looks at two asset classes that investors are turning to now for yields. While business development companies and municipal bond closed-end funds have low correlation, investors are looking at both asset types in order to raise yield levels in this market. Scott digs into his firm's data to examine where the two asset classes stand and offers a few picks in each sector that he thin...
Regulatory capital relief securities add yield, diversification to banking portfolios
February 16, 2024 14:26 - 10 minutes - 10.2 MBDana Staggs, president of ArrowMark Financial Corp. -- a non-diversified, closed-end fund that trades under ticker symbol BANX -- talks about why the fund has changed in recent years to where 87 percent of its holdings are now in regulatory capital relief securities, and what that esoteric asset can add to a diversified portfolio. Staggs also discusses his outlook for banking -- where he acknowledges the potential for troubles but says they should not be systemic, disruptive problems -- and ...
abrdn's Mondillo: Downtrodden muni funds now represent a big opportunity
February 09, 2024 13:14 - 10 minutes - 9.86 MBJonathan Mondillo, head of North American fixed income for abrdn, says the municipal bond market has been looking at a "teacup inversion," and as that changes when the Federal Reserve cuts rates later this year, it should set up well for a barbell approach, with the bargains and values being at the short and long ends of the curve. He notes that the last 12 to 18 months have been hard for muni debt and closed-end funds in general, but that with rates having come to a peak, there is now real ...
SCG's Merrill on how derivatives mitigate risk and goose equity returns.
February 02, 2024 15:25 - 11 minutes - 10.8 MBIan Merrill, president of SCG Asset Management -- which runs The Alternative Strategies Income Fund, a continuously offered closed-end interval fund -- says that investors can change the risk-reward picture in equities by using derivatives to reduce risk but also set up the potential for higher income. He suggests that using derivatives allow a classic 60-40 balanced investor to go to 50-30-20, with derivatives representing the last part of the allocation and generating returns that normally...
VettaFi's Islam on the ETFs that are buying closed-end funds
January 26, 2024 15:09 - 10 minutes - 10.5 MBRoxanna Islam, head of sector and industry research at VettaFi, digs into the active and passive exchange-traded funds that invest in closed-end funds, looking at the choices, the new funds and the options investors have for buying ready-made portfolios of closed-end funds thanks to the simplicity of ETFs versus the chores of building their own portfolios. She notes that the active ETFs have some potential that the index-oriented versions have seemed to be missing in current market conditions.
Angel Oak's Pate sees opportunities in banking as rate cycle pivots
January 19, 2024 14:32 - 10 minutes - 10.2 MBCheryl Pate, senior portfolio manager at Angel Oak Capital and manager of the Angel Oak Financial Strategies Income Term Trust, says that 2024 "will bring a still somewhat tough operating environment for the banks but net interest margins are abating, valuations are cheap and [mergers and acquisitions] activity should accelerate from here." That gives banks an attractive opportunity set, particularly by focusing on credit quality and looking for "a fundamental mispricing of bank debt" that i...
CAIA's Filbeck on 'taking the alternative out of alternatives'
January 12, 2024 15:53 - 12 minutes - 12.3 MBAaron Filbeck, managing director at the CAIA Association -- industry association for Chartered Alternative Investment Analysts -- says that the evolution of alternatives over the last few decades has made it to where it's naive for investors to effectively lump the wide range of investment options under the simple label of "alternatives." Filbeck, who oversees UniFi by CAIA -- a platform that educates private wealth managers about alternative investments -- says that sophisticated investors ...
2024 look-ahead: John Cole Scott on what the new year holds for closed-end funds
January 05, 2024 18:03 - 14 minutes - 13.7 MBJohn Cole Scott, president of Closed-End Fund Advisors -- chairman of the Active Investment Company Alliance -- does his annual forecast for the year ahead, noting that he expects closed-end funds to outperform the general equity markets, and he expects a mild narrowing of discounts from current average levels of roughly 7 percent, noting that bond funds should benefit from changing interest rates. He also looks at shareholder activism, yields and more, before picking a few funds that he exp...
2023 Year in Review: Closed-end funds bounce back, but leave room for more
December 29, 2023 15:54 - 13 minutes - 12.9 MBJohn Cole Scott - president of Closed-End Fund Advisors and the chairman of the Active Investment Company Alliance - looks back at how the closed-end fund industry bounced back from the challenges of a terrible year in 2022, and how his forecasts from a year ago played out. He came out on the winning side of the ledger in his forecasts, but especially with his basket of five funds selected as likely winners for 2023.
Nuveen's Langenfeld: 'A timely opportunity' to invest in preferred securities
December 22, 2023 14:58 - 10 minutes - 10.3 MBBrenda Langenfeld, lead portfolio manager for the Nuveen Preferred and Income Opportunities Fund and the Nuveen Variable Rate Preferred and Income Fund, says that conditions are favorable on a number of different levels, setting up preferred securities for a strong year ahead as interest rates move lower in the year ahead. She noted that heightened banking regulatory oversight will be favorable for credit investors, that positive fundamentals suggest stability and growth and that valuations ...
Thornburg's Sparkman lengthens maturities and leans international now
December 15, 2023 15:23 - 9 minutes - 9.44 MBAdam Sparkman, client portfolio manager at Thornburg -- part of the team running TBLD, the Thornburg Income Builder Opportunity Trust -- says that current market conditions favor the flexibility of a multi-asset approach, noting that "it's a different menu within fixed income entering 2024 than it was a couple of years ago." The changes in the rate environment have allowed the firm to increase credit quality. "We're taking less credit risk and we're looking to add a bit of duration," Sparkm...
Abrdn's Taggart says discounts are 'overplayed'
December 08, 2023 14:14 - 10 minutes - 10.1 MBMike Taggart, closed-end fund specialist at abrdn, says that the overwhelming majority of closed-end funds were created to generate income -- and built with that in mind -- but that the sector gets a lot of its attention as the result of discounts, and he feels the discount angle is "overplayed," because the investor who focuses on the income gets the discount as a bit of extra yield but the person who wants to capture the discount needs to ride out the market's bumps and bruises to hang on ...
ASA Gold's Merk on how precious metals will respond in a coming recession
December 01, 2023 14:43 - 10 minutes - 10 MBAxel Merk, chief investment officer for the ASA Gold and Precious Metals fund, says that gold prices are most tightly correlated to "the confidence the market has in the central bank to manage inflation over time," so gold's rally over the last six weeks -- as well as its path forward -- is "favorable because we might be entering a recession, most notably a recession that is more severe than is currently priced into the market." Merk says he does not foresee a soft landing for the economy --...
Let's go Black Friday discount shopping with John Cole Scott
November 24, 2023 16:10 - 12 minutes - 12.2 MBJohn Cole Scott, president of Closed-End Fund Advisors and the chairman of the Active Investment Company Alliance, tackles the biggest shopping day of the year closed-end fund style, talking about where discounts stand in general for the industry, but also hunting for year-end bargains and looking at three cases to determine whether the Black Friday sale on the fund is a real deal, an average play or a fake-out.
Sit Invest's Doty on muni-bond discounts and how they will be trimmed
November 17, 2023 13:48 - 11 minutes - 11.1 MBBryce Doty, senior portfolio manager at Sit Investment Associates, says that muni-bond closed-end funds using leverage -- where the cost of their borrowings are effectively wiping out returns given current conditions -- are more interested in keeping fees high than making money for shareholders, which is one reason why his firm has become a more activist shareholder. With the average muni-bond discount at roughly 13.5 percent -- more than three times its historic norms -- Doty says it should...
Abrdn's Purington: Exxon, Chevron deals will trigger an infrastructure merger wave
November 10, 2023 15:40 - 11 minutes - 11.2 MBEric Purington, portfolio manager for the Aberdeen Global Infrastructure Income Fund, says that two mega-mergers outside of the infrastructure space -- deals involving upstream energy giants Exxon and Chevron -- have a lot of implications for middle-market/midstream energy companies and infrastructure stocks. Purington says that the larger energy companies are now poised to make big investments, which will trickle down to infrastructure and services companies, but adds that these big deals h...
XA's Perry looks at the boom in non-listed funds
November 03, 2023 14:20 - 10 minutes - 10.5 MBSteven Perry, vice president at XA Investments, discusses the surge in activity and creation for non-listed closed-end funds, covering why money managers, including a number of prominent sponsors who have never been in the space before, are turning to the products now and how investors can use the new issues to access additional asset classes.
Angel Oak's Pate: Bank debt should 'outperform in the current environment'
October 27, 2023 11:26 - 12 minutes - 17.2 MBCheryl Pate, senior portfolio manager at Angel Oak Capital -- co-manager of the Angel Oak Financial Strategies Income Term Trust (FINS) -- says the banking industry's wild ride since the failure of Silicon Valley Bank in March has created "a market dislocation" in pricing for bank equities and debt, which has created a strong opportunity for bank debt to outperform moving forward. Pate notes that the banking industry has quelled fears over failure contagion, the Fed is nearing the end of the...
John Cole Scott reviews a rough quarter for closed-end funds
October 20, 2023 14:04 - 14 minutes - 20.4 MBJohn Cole Scott, president of Closed-End Fund Advisors -- the chairman of the Active Investment Company Alliance -- digs into his data to give a recap of the third quarter for the closed-end fund industry, noting that municipal bond funds and REIT funds particularly took it on the chin, with the entire categories being down during the period by 10 and 7 percent respectively. Business-development companies were the top category based on average returns, but senior loan funds were the can't-mi...
VettaFi's Islam on the struggles/potential of ETFs buying closed-end funds
October 13, 2023 13:56 - 9 minutes - 13.6 MBRoxanna Islam, head of sector and industry research at VettaFi, says that cautious retail investors have been looking for safety and yield and that while closed-end funds have traditionally filled that bill, investors in ETFs that buy closed-end funds have been avoiding a lot of the struggles by turning elsewhere to invest. She believes that could be changing, however, as investors recognize the bargains that closed-end funds represent, particularly in ETFs of CEFs, where investors get diver...
Calamos' Bush: Tough conditions for closed-end funds to stand out, excel
October 06, 2023 13:08 - 11 minutes - 16.9 MBRobert Bush, director of closed-end products at Calamos Investments, says that with risk-free money from bank accounts and Treasury bonds at high levels -- and with leverage costs up in response to those higher rates -- investors can have a lot of choices for good income without ever considering closed-end funds. But with the average closed-end fund discount widening from roughly 8 percent at the start of the year to nearly 10 percent today, closed-end investors are likely to be rewarded for...
Blue Bay's Farley: Rate turmoil is making opportunities in event-driven credit
September 29, 2023 14:07 - 11 minutes - 11.1 MBDuncan Farley, portfolio manager for BlueBay Asset Management -- manager of the BlueBay Destra International Event-Driven Credit Fund -- says that the rising cost of capital for businesses and interest rates that are staying higher for longer is creating more "special situations" opportunities and that it's not too late for investors to take advantage of those credits despite several years of strong performance in the event-driven credit arena. He noted that it's easy to shake off common wor...
Muni discounts keep defying gravity; sizing up fixed-income risk and more
September 22, 2023 15:01 - 12 minutes - 12.2 MBJohn Cole Scott, president of Closed-End Fund Advisors -- and the chairman of the Active Investment Company Alliance -- returns to The NAVigator noting that the discounts on muni funds have continued to get wider. He notes that the average discount for a closed-end muni fund stands now at 12.5 percent compared to their 10-year average of just under 5 percent, and talks about what is discouraging investors from heading into m unis now. He also compares muni funds to BDCs and discusses how inv...
Angel Oak's McBurnette on opportunities in housing, mortgages
September 15, 2023 14:10 - 9 minutes - 9.41 MBColin McBurnette, senior portfolio manager at the Angel Oak Funds, says that while high-rate and high-inflationary conditions have made a lot of investors worry about the housing market, those conditions -- along with wide spreads and low housing stocks creating an imbalance in the supply-and-demand dynamic -- have created real opportunities in the space. The tight market has made the housing market of mortgage credit particularly robust, with strong borrowers as the rate cycle is likely to ...
Oppenheimer's Penn: BDCs have adjusted to higher default risks
September 08, 2023 12:55 - 11 minutes - 10.7 MBMitchel Penn, managing director of equity research at Oppenheimer and Co., says that higher interest rates and stubborn inflation have impacted business development companies in terms of both defaults and leverage, but he notes that BDC executives have taken steps to minimize the impacts. Moreover, current conditions should have BDCs primed for better returns than they could deliver during low-rate times; Penn also names five BDCs worth considering now.
Four classic closed-end funds that remain relevant and vibrant today
September 01, 2023 13:51 - 11 minutes - 10.9 MBVeteran money manager David Tepper, president of Tepper Capital Management, looks at four of the oldest closed-end funds -- Adams Diversified Equity, Central Securities, General American Investors and Tri-Continental -- that he has owned for decades, but which remain relevant and effective today, and which are trading at attractive discounts now.
40 closed-end funds, a million ways to build a portfolio
August 25, 2023 13:51 - 12 minutes - 11.6 MBJohn Cole Scott, president, Closed-End Fund Advisors -- chairman of the Active Investment Company Alliance -- discusses portfolio construction and the many factors that go into a diversified safe and solid separately managed account with closed-end funds and business-development companies as the primary focus. He details a diversified tax-sensitive income fund, discussing the many factors that went into selecting each security for it, and how his focus on certain key elements excludes some s...
NAVigator bonus: Discounts are at widest levels in years, hunker down and buy
August 21, 2023 12:00 - 12 minutes - 18.3 MBIn a bonus episode of The NAVigator, John Cole Scott, president of Closed-End Fund Advisors and the chairman of the Active Investment Company Alliance, discusses the historic level of deep discounts he is seeing in closed-end funds, and how that translates to buying opportunities now. Closed-end funds have seldom seen bigger discounts in the last quarter-century, Scott said, and says the current level of yields are helping to confirm the current opportunity, despite the beating that closed-...
Liberty Street's Munafo says opportunity is knocking for private shares
August 18, 2023 14:23 - 12 minutes - 11.6 MBChristian Munafo, chief investment officer at Liberty Street Advisors -- which runs the Private Shares Fund -- says that the perceived higher risks in challening environemnts like the one we are facing today often lead to attractive opportunities and oversized future gains, which makes current conditions attractive for private equity and venture capital investing. Munafo notes that private markets are more stable than their public counterparts, but signs of improvement are there now, leading...
Nuveen's Caraher: High-rates-for-longer puts emphasis on credit selection
August 11, 2023 15:36 - 15 minutes - 14.5 MBScott Caraher, head of senior loans at Nuveen -- manager of the Nuveen Floating Rate Income fund -- says that the higher-than-expected increase in rates that has driven up borrowing costs has made credit selection 'more important today than it has ever been.' He notes that lower-rated companies can't sustain high levels of interest payments for long levels of time. As a result, Caraher says he is underweight the lower-quality part of the market, wary of a pick-up in default rates; the flip s...
Economic conditions have given private credit lenders more power
August 04, 2023 14:14 - 13 minutes - 13 MBChris Oberbeck, chairman and chief executive at Saratoga Investment Corp., says that the balance of power in the lender-borrower relationship has shifted dramatically in the last 12 to 24 months, with banks now pulling back which is leaving private lenders with better terms and more power to insist on superior deals. Oberbeck notes that those conditions are putting BDCs generally -- but Saratoga specifically, thanks to an all-weather portfolio of loans -- in a better position to minimize any...