Asset-Based Credit: The Post-Bank Era

March 20, 2024

In this new series, TPG Angelo Gordon’s Structured Credit & Specialty Finance team offers a deep dive on an emerging, but core, private credit asset class: specialty or asset-based private credit. In addition to providing an introduction to specialty private credit and overview of why it can be an attractive add-on to investors’ private credit portfolios, we will examine how current dynamics in the U.S. banking sector are impacting the market opportunity in this space and discuss the outlook for the future.

Mar. 20, 2024 – We’ve previously established that banks’ need to de-risk can benefit investors in specialty private credit, though it is important to consider what is spurring the de-risking trend, what kinds of non-corporate credit banks will be most focused on offloading, and the anticipated sustainability of the opportunity set at hand. In this paper, we explore the three primary areas in which banks will likely seek to de-risk – commercial real estate debt, residential real estate debt, and consumer debt – and discuss some of the important fundamentals underlying those types of credit.

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Feb. 22, 2024 – TPG Chief Executive Officer Jon Winkelried and TPG Angelo Gordon’s Head of Structured Credit & Specialty Finance T.J. Durkin share their views on specialty or asset-based private credit, including the state of the market today, the impact of macroeconomic events and banking sector dynamics, and where they see the market opportunity moving forward.

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Feb. 6, 2024 – U.S. banks are between a rock and a hard place. On the one hand, disruptive change – primarily driven by higher interest rates – has raised borrowing costs, discouraged lending, depressed asset prices, and contributed to the collapse of several regional banks in early 2023. On the other hand, tight regulatory scrutiny and the upcoming Basel III Endgame regulations may force a growing number of banks to raise additional capital and further de-risk their balance sheets. In this paper, we review these dynamics and the impact on the specialty private credit investment opportunity set.

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Jan. 23, 2024 – The private credit space has grown tremendously over the last 10-plus years, and that expansion has taken place alongside a broader upward trend in risk-asset valuations and increased recognition of the challenges associated with constructing portfolios that adequately balance return objectives and risk mitigation. Against this backdrop, the TPG Angelo Gordon Structured Credit & Specialty Finance team highlights why investing in “specialty” or “asset-based” private credit can be a powerful tool.

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