KKR's Nat Zilkha on Credit Opportunities

The video discusses the transformation in the banking industry post-financial crisis, highlighting regulatory changes and economic shifts. It explores differences in banking across the US, Europe, and Asia, with a focus on China's bad debt and potential investment opportunities. Current investment strategies are examined, emphasizing a defensive approach in credit markets. The impact of hedge fund redemptions on credit markets is also analyzed, presenting opportunities for long-term investors.

What has driven the transformation in the banking industry post the financial crisis?

• Technological advancements

• Increased competition from fintech

• Regulatory changes and economic shifts

• Globalization of financial markets

How are European banks currently valued in the market?

• At a premium to their book value

• Above their market value

• At their book value

• At fractions of their book value

What is a significant challenge for Chinese banks regarding bad debt?

• Overregulation

• Lack of domestic capital

• Reluctance to recognize and address bad debt

• High interest rates

What is the estimated scale of bad debt in the Chinese banking system?

• 1 trillion RMB

• 500 billion RMB

• 1.2 trillion RMB

• 2 trillion RMB

What approach is being taken in credit investment currently?

• Aggressive and high-risk

• Defensive and patient

• Short-term and speculative

• Unregulated and open-ended

What is a potential opportunity arising from hedge fund redemptions?

• Selling assets at a discount

• Avoiding illiquid investments

• Buying assets at a premium

• Buying assets at a discount

What is the current state of the credit market due to monetary policy?

• Stable and predictable

• Unprecedented distortions

• Declining interest rates

• Increasing liquidity