{"type":"rich","version":"1.0","provider_name":"Transistor","provider_url":"https://transistor.fm","author_name":"In Conversation with Julie Segal","title":"Cheyne's Stuart Fiertz on Private Credit's Slow-Motion Stress Test","html":"","width":"100%","height":180,"duration":2871,"description":"In this episode, I spoke with Stuart Fiertz, co-founder and president of Cheyne Capital.I've known Stuart for years and one of the things I appreciate most about him is his willingness to say things that many people in the industry are thinking but few will say publicly. This conversation was a good example.We started with private credit, because, well, there’s a lot to say. Stuart argued that many of the concerns he and other investors have raised over the years are beginning to surface. He discusses the rise of payment-in-kind loans, concentration in software and technology, and why he believes the industry still hasn't fully absorbed the consequences of the dramatic interest-rate shift that began in 2020.As Stuart put it: \"You just can't have such a momentous change in an interest-rate regime and not have fallout from that.\"But he doesn't expect a dramatic collapse. In fact, the industry has become remarkably good, perhaps too good, at delaying any reckoning. Loose covenants, refinancing activity, continuation vehicles, evergreen capital, and fresh sources of funding are all helping extend the credit cycle. The problems are showing up, Stuart argues, but they're unfolding far more slowly than many expected.We also discussed what may ultimately unlock the industry's enormous backlog of unsold private companies. Stuart has been thinking about this question for a while. When he entered the business, private equity often created significant value by taking public companies private and improving them. Today, many businesses have been passed from one sponsor to another through multiple ownership cycles.Stuart’s question is a simple one: \"Who is leaving value on the table?\" he asked.His point was not simply that valuations remain too high. “I think there's a little bit of a challenge here that is more fundamental than I think people realize. It's part that the lemon's been squeezed. I think it's going to take a meaningful valuation haircut to move them. And I'm just...","thumbnail_url":"https://img.transistorcdn.com/sGbiGXnQa59mCHdT4R21dhwLURlGMJ1i42suZKEbNto/rs:fill:0:0:1/w:400/h:400/q:60/mb:500000/aHR0cHM6Ly9pbWct/dXBsb2FkLXByb2R1/Y3Rpb24udHJhbnNp/c3Rvci5mbS9iNjhk/OWFjYzE0YTljOGYz/ZGMyMDdmNzI5YmNk/MmI3Zi5qcGc.webp","thumbnail_width":300,"thumbnail_height":300}