The widespread use of covenant-lite loans will delay distress but, when a downturn hits, “structural nuances” such as EBITDA addbacks and restricted payment baskets will be put to the test, says Michael Arougheti, director, co-founder, chief executive officer and president of New York-based fund manager Ares Management.
In an eight-minute video with PDI, he reflects on the growth of the market beyond mid-market corporates to real estate, structured credit and asset-backed credit; how growth in investor allocations will be sustained regardless of the rate environment; and why retirees can’t get the 6-8 percent return they need without private credit solutions.