Keep pulling the thread on Howard Marks.
The private credit market emerged around 2011-2012 as banks, chastened by the Global Financial Crisis and tighter regulation, reduced their risk-taking.
The private credit market has grown more than six-fold in 17 years, from approximately $250 billion in 2007 to over $1.5 trillion today.
The private equity industry has accumulated approximately $2.5 trillion in "dry powder," which is capital committed by investors but not yet deployed.
Private equity funds are currently holding an estimated $3 trillion worth of portfolio companies that need to be sold to return capital to investors.
A slowdown in private equity exits is causing lower-than-expected cash distributions to limited partners, which in turn is leading them to reduce commitments to new funds.
Howard Marks believes the shift to a higher interest rate environment that began in 2022 is a structural and long-lasting change.
Brookfield Asset Management acquired a majority stake of approximately 70% in Oaktree Capital Management.
Oaktree Capital Management has grown its assets under management from $7 billion at its founding in 1995 to over $200 billion today.
Howard Marks suggests that smaller reported drawdowns in private credit (e.g., down 2%) compared to public high-yield bonds (e.g., down 10%) during market downturns are due to differences in valuation methodology, not necessarily better underlying performance.
Howard Marks states that the SEC does not regulate the valuation accuracy of private credit investments because they are private securities.
Investors who held "Nifty Fifty" stocks for five years starting from September 1969 lost approximately 95% of their investment.
Howard Marks started Citibank's high-yield bond fund in 1978, which he believes was the first of its kind from a mainstream financial institution.