Debunking Private Credit "Doom" | Michael Haynes of Beach Point Capital

Today's episode is brought to you by QIA NXT. Later in the show, you'll hear more about how you can take the next step for your clients with QIA NXT's alternatives education courses. But for now, let's get into today's interview. I am joined today by Michael Haines, head of private credit at Beach Point Capital Management, a credit firm that manages over $20,000,000,000 in assets under management. Michael, welcome to Monetary Matters.

Thank you for having me. Pleasure to be here.

So, Michael, many of our viewers, probably have seen the phrase private credit in headlines over the past two to three months. That is a term that encompasses like 11 different things. And, you know, perhaps it would be a little bit more of a dramatic episode if you were, in the eye your firm was in, you know, in the eye of the hurricane, the eye of the storm of a firm that had a high amount of retail capital, so not institutional capital, and a high amount of software loans. And that kind of is the area of concern. There's a little bit of a liquidity crunch, and perhaps maybe it's little bit

Thank you for pointing I I was gonna point it out if you didn't, but appreciate that.

Definitely. Tell us about what how do you define what you do as private credit? How much of it is direct lending? How much of it is asset backed lending as as well as the differences in an investor LP composition between a firm like yours and the firms that, you know, we're reading about in the headlines?

Sure. Let's see. I'm going to take those in slightly reverse order. First, Beach Point, as you mentioned, we manage over $20,000,000,000 We manage money for institutions. We do not manage retail capital. Our investors are generally large plans of both public and corporate, together with some foundations and endowments, some sort of high net worth family offices and so forth. But largely it's institutional capital, it's very patient capital, and our clientele are pretty targeted in what they're trying to achieve, whether in public or private markets, and I'll get to why I think that's particula

So you named, like, don't know, or six different markets, and you said that at an advantage is you can see where the best risk reward is right now. Where would you say the best risk reward is across those markets you you see? Or some of the ones that are most compelling.

Let's see, if you're my client, my first question would be, please explain to me what your objectives are and your appetite is for volatility, illiquidity, drawdowns and so forth. And so I think that's best probably explained by talking about for each individual market where I think we kind of are in that cycle. And as I mentioned, the market's always moving, like are we at the most attractive end of the range of opportunities or the least, and it's different for each one. Starting with direct lending. Direct lending

Which again is lending to companies?