Blackstone has suffered severe losses across its credit investments in both performing and distressed debt.
In its first quarter report, Blackstone revealed performing credit gross returns in Q1 2020 of -16.7 percent, while the distressed portfolio returned -31.8 percent. On a last-12-month basis, gross returns were -11.2 percent for performing credit and -36.2 percent for distressed. Credit saw a gross composite return of -13.6 percent in the quarter, which the firm said was due to the economic and market impacts of covid-19 and energy market dislocation.
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Total assets under management of the credit business reached $128.7 billion after inflows of $2.5 billion in Q1. Blackstone closed one CLO and priced two more while closing its latest European direct lending vehicle at $6.2 billion during the period.
Blackstone’s credit business suffered from high-profile departures last year, including the loss of GSO Capital Partners co-founder Bennett Goodman, who retired at the end of 2019, the last of the three founding partners to leave the business, having previously seen Doug Ostrover and Tripp Smith depart the firm in recent years.
Goodman’s retirement forced Blackstone to negotiate with investors to enable its latest $7 billion credit fund to continue investing. A key-person clause was triggered after Jason New, GSO’s former co-head of distressed debt and special situation investing, also left the business.
The private markets giant also saw losses in its energy business, which pushed its Corporate Private Equity unit down -21.6 percent in the quarter.