Annual review: 2015 in quotes

JANUARY
“There is a major change and shift among the management team that this private debt alternative is now a real mainstream solution.”
Cécile Mayer-Levi, co-head of private debt at Tikehau Investment Management, explains the evolution of the private debt sector.

FEBRUARY
“It’s largely going to be middle-market corporates: good companies with bad capital structures, where their traditional lending institutions are busy elsewhere and we can step in on the private credit front.”
Scott Nuttall, KKR’s head of global capital and asset management, describes the borrowers the firm’s new European direct lending fund will seek.

“I think we’ll have a very eventful 2015. A lot of companies are cutting their capex and are pretty restricted on what they can do. They need our capital and other long-term investors are gearing up to address those needs.”
Dwight Scott, head of GSO Capital Partners’ energy practice, on opportunities in the sector.

APRIL
“It is my belief that in a crisis environment, non-bank lenders will not continue rolling over loans or extending new credit except at exorbitant prices that take advantage of the crisis situation.”
JPMorgan chief executive Jamie Dimon postulates that alternative lenders will not lend during the next financial crisis in a ‘thought experiment’ published in his annual letter to shareholders.

“Diverse ecosystems are much more resilient than uniform ecosystems. A financial system that is more diverse will be a financial system that is more stable.”
Larry Summers, former US Treasury Secretary and an investor in Lending Club, speaking at Lendlt.

MAY
“The clear message behind a debt fund is that they would be very comfortable accelerating enforcing against a property in the event of a default, as they have little reputational risk compared to the traditional banking market.”
RBS’s Jason Presence, speaking at the Loan Market Association Real Estate Conference, argues that some non-bank lenders are, in stressed scenarios, effectively loan-to-own investors.

JUNE
“As all of you are fully aware, we are at the centre of a storm, of a whirlpool, but we live near the sea so we are not scared of storms. We are ready to go to new seas to reach new safe ports.”
Alexis Tsipras, prime minister of Greece, during a speech delivered in Russia, amid crunch time talks with creditors.

AUGUST
“China is being very active in working toward solutions for their growing pool of non-
performing loans. One of those solutions is transferring the bad debt into the market, so that bank balance sheets are not saddled with NPLs and banks can focus on their core businesses of taking deposits and lending.”
Benjamin Fanger, co-founder of Shoreline Capital, on the growing NPL problem in China.

“Europe is in some ways the most difficult market in terms of pricing for private equities but for direct lending, we feel very good…We are finding the returns to be excellent.”
Tony James, president of Blackstone, prefers direct lending in Europe compared with the US.

SEPTEMBER
“In reality, it’s just been very challenging to invest in private debt in the western world.”
Mark Katz of Ontario Teachers’ Pension Plan says private debt is not delivering the 7-8 percent net returns OTPP is seeking.

“There are a lot of folks in the private debt universe that would like to access retail/ultra-high net worth investors.”
Adam Rochlin, senior vice-president and product director within Oppenheimer’s taxable fixed income and alternative strategies group.

NOVEMBER
“Those familiar with our history and investment philosophy understand that it is not in our nature to be public market equity activists. We have reluctantly assumed this role with respect to TICC as our industry is going through an inflection point, and we believe that our ecosystem can only thrive in a culture that fosters real value creation for shareholders.”
Josh Easterly, chief executive of TPG Specialty Lending, on his attempts to call attention to poor management at BDCs through a bid for TICC.

“The world is much more about new credit creation now, and that is where we are finding the most interesting opportunities.”
Christopher Acito, chief executive and chief investment officer at Gapstow.

DECEMBER
“The markets are relentless and ruthless when it comes to dealing with bad behaviour.”
Angelo, Gordon & Co. president Larry Schloss on why hedge funds with a liquidity mis-match are struggling.