Rates Need to Hit 6% Before Firms Struggle: Ares's Jacobson

The video discusses the current economic environment, highlighting concerns about inflation, rising interest rates, and potential recession. It explores how these factors impact lending strategies, with a focus on cautious capital deployment and risk management. The discussion includes portfolio management strategies to mitigate default risks, emphasizing stable sectors less linked to GDP growth. The impact of rising interest rates on capital structure and the trend of floating rate loans are examined. The video also addresses industry trends, such as covenant light lending, and the challenges faced by larger companies in accessing capital.

What are the three major concerns mentioned regarding the current economic environment?

How has inflation impacted the lending practices of private equity firms?

What factors are contributing to the cautious approach in lending?

What sectors does the portfolio avoid due to high default risk?

What is the significance of having a strong capital base in the current lending environment?

How are companies hedging against interest rate exposure?

What trends have been observed in the demand for funding among larger companies?