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00:00As more people get more bullish on private credit, should they be more wary of the lag that's built in into private credit markets? Joel, great, great to see you again, Christi and John. Absolutely. I think, you know, the more conservative strategies today certainly are the ones that that are going to hold a day. You know, the reality is that as we head toward potentially a rough, rough year, as we move into potentially a recessionary dynamic, I think the more conservative managers are going to be the ones in favor. And I certainly think that's the case with with our capital race. You know, our investors are looking for us to focus on defensive industries. Companies that, you know, are reasonably leveraged with traditional covenants and in better structures. And certainly that's where we focus historically. And I think that's the main reason why investors we're attracted to our strategy. Can you reference to your capital raise and it was a big one. I mean, in a year where you're not seeing, for example, a lot of IPO goes on, Wall Street talked to us about in your neck of the woods what the mood has been like. Well, you know, it's surprising, you know, the the level of investment activity we've seen in the last last quarter, really in the last year has remained extremely active. And I would say in the middle market, you're still seeing higher quality companies transact, you know, businesses that may be impacted by, you know, inflationary pressures, inability to pass on price increases in other dynamics with the supply chain. I think those business are being pulled off the market, if you will, to kind of wait out a better environment. But but the higher quality companies, the companies that have significant strong cash flow, maybe in many cases companies have benefited from the dynamics of Covid either in health care or through, you know, logistics or distribution. Businesses that really have accelerated those business are still trading. And in fact, the multiples we're seeing for those higher quality companies remain quite robust, 15, 20 times cash flow for very, very strong companies in defensive industries. So that's where we're focusing. And of course, today, given the rise in underlying base rates and obviously improving spreads, the same loan that we did a year ago at 6 to 7 percent, we're now getting 9 to 10 percent for traditional first lien senior secured loans, 40 percent loan to value. Strong covenants. So we think it's a great time. As long as you are more conservative and more selective in the names in the businesses that you're looking at. Well, can one of the other major spotlights is on liquidity? There are parts of the credit market that are now seeing far more liquidity and far more yield as well. Of course, as you see baseline treasuries get higher and higher as well. But I'm curious if that makes private credit less attractive by comparison, especially at a time when a lot of companies are also looking to right size some of their balance sheets. Well, you know, I think that what also has happened in the private credit market, which is a real advantage, is it because the the broadly syndicated loan markets, the liquid markets are essentially closed to new issue? You know, there obviously is a secondary player them in that market. But in terms of new deals, new financings, new opportunities, the private markets are really where it's at. And as a result, we're seeing larger companies with more scale, with broader business models. You don't go to the private markets. And as a result, we feel that's a real advantage. We're getting better pricing. Larger companies, traditional structure. So, you know, in many respects, the private markets are benefiting from the essentially closed new issue market in the public public market. So, you know, I've heard prior commentary about the secondary opportunities in the BSL market, which I agree with. But if you look at the primary market, it's really private credit that's providing that financing. Obviously, we offer certainty. We offer a stable financing solution for businesses that are looking to grow and raise capital. So we're very busy. We had a record quarter in the third quarter. Year to date, we've invested nearly 10 billion dollars and in over 200 mid-market companies. So we're very busy and obviously putting the capital that we've raised to work.

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Churchill Asset Management CEO Kencel on Private Credit

Churchill Asset Management CEO Ken Kencel, discusses the attractiveness of private credit. He speaks with Kriti Gupta and Jon Erlichman on "Bloomberg Markets." (Source: Bloomberg)