The Credit Edge by Bloomberg Intelligence

Private credit disarray spells opportunity for housing giant Pretium, which targets high returns by lending to US homebuilders. “Our private credit looks a little bit different than other private credit in the sense that we are secured, we have real good downside protection,” Jon Pruzan, the company’s co-president, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Erica Adelberg in this episode of the Credit Edge podcast. “We have a lot of people who want capital and not a lot of people providing capital — that puts us in an opportunity to continue to generate attractive returns,” says Pruzan, who was previously chief financial officer at Morgan Stanley. They also discuss housing fundamentals, opportunity by region, how Pretium achieves midteens returns and political risks going into the November US midterm elections.See omnystudio.com/listener for privacy information.

Mortgage-backed securities look attractive even after government purchases snapped spreads tighter, according to Clark Capital Management. “I don’t think the trade is completely over yet because corporates are even tighter,” Oliver Chambers, head of fixed income for the firm’s separately managed accounts, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Erica Adelberg in this episode of the Credit Edge podcast. “You can go in and clip a 4.5% coupon and have potential for some price appreciation if rates do come down,” says Chambers. They also discuss technology debt risk, the market impact of new leadership at the Federal Reserve and what the central bank would do if there’s a big selloff.See omnystudio.com/listener for privacy information.

Corporate loans signed when rates were low are increasingly hitting a wall as they come due, according to H.I.G Bayside. “There’s a level of discount in these stressed credits that we haven’t seen for a number of years,” Jackson Craig, who co-heads the credit-focused arm of H.I.G. Capital, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Tim Riminton in this episode of the Credit Edge podcast. “The dislocations that are occurring and the discounts that original lenders are willing to take to shed troubled assets has grown,” says Craig, who focuses on distressed debt. They also discuss private credit defaults, trouble in the chemicals sector, forced selling by collateralized loan obligations and how liability management is adding pressure.See omnystudio.com/listener for privacy information.

Pressure on highly-indebted companies will intensify as interest rates remain elevated, according to Seix Investment Advisors. “We have a lot of credit zombies — B3/B minus or CCC rated credits — that still have very weak interest coverage, generating zero free cash flow,” George Goudelias, chief investment officer of the firm’s leveraged finance platform, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Jean-Yves Coupin in this episode of the Credit Edge podcast. “There are mine fields to avoid in this market,” he adds. They also discuss the impact of private credit on public leveraged finance, why Seix is bearish on technology and how rising “sell America” sentiment could affect corporate debt.See omnystudio.com/listener for privacy information.