(Bloomberg) -- Private credit will “wildly outperform” the high-yield and leveraged loan markets in a recession, James Zelter, co-president of Apollo Global Management Inc. said in an interview on Bloomberg Radio.
Private credit has “better companies, larger companies, better covenants, better structure” than public markets, helping it to weather an economic downturn, Zelter said, adding that he doesn’t expect a recession in the near future.
Rapid growth over the past decade has fueled the private credit industry’s rise into a $1.7 trillion market. The sharp rise in interest rates over the past two years provided a further opportunity for growth as banks cut back on lending via the leveraged loan and high-yield bond markets.
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Apollo is pushing deeper into private credit through a partnership it recently signed with Citigroup Inc. to arrange financings for corporate and private equity clients.
The firm was “making sure if you’re going to go, go big,” Zelter said of the deal, which will involve $25 billion worth of deals over the next five years. “This is seeing us through periods of volatility,” Zelter said.
Mubadala Investment Co. and Apollo’s insurance unit Athene will also participate in the venture, which will initially focus on North America.
Zelter worked at Citi from 1994 to 2006, according to his LinkedIn page.
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