Ares Capital CEO Kipp deVeer on Credit Market

The video discusses the current state of private capital credit markets, highlighting the potential for increased defaults due to rising interest rates. It explores opportunities in private credit, particularly in the middle market, and the impact of these rates on companies' debt servicing capabilities. The discussion also covers real estate market dynamics and secondary market activities, emphasizing the importance of interest rate hedging and portfolio management strategies.

What is the current expectation for default rates in the private capital credit markets?

• They are expected to align with historical averages.

• They are expected to decrease below current levels.

• They are expected to rise significantly above historical averages.

• They are expected to remain below historical averages.

What advantage do private credit participants have over banks in the current market?

• Lower risk of defaults.

• Access to more government funding.

• Focus on smaller deals with higher rates.

• Ability to underwrite larger deals.

How are rising interest rates affecting companies' ability to service debt?

• Companies are generally able to manage despite potential recessions.

• Companies are struggling significantly.

• Companies are defaulting at unprecedented rates.

• Companies are unaffected by interest rate changes.

What is a major challenge for equity investors in the current market?

• Multiple contraction with higher rates.

• Increased growth opportunities.

• Decreased competition.

• Stable asset prices.

What proactive measure has been taken to address floating rate debt?

• Increasing the amount of floating rate debt.

• Hedging against interest rate changes.

• Reducing the number of loans.

• Switching to fixed rate debt.

What has been the focus of the real estate group in the current market?

• Retail and commercial properties.

• Luxury residential developments.

• Industrial and multifamily opportunities.

• Hospitality and office investments.

What is the potential impact of further interest rate increases on companies?

• Increased investment opportunities.

• Improved financial performance.

• Significant problems for companies.

• No impact on companies.