Tikehau's Chabran Talks Private Credit, Sees Rates Going Up

I think it's only going one way, which is up seasonally, really. I think that we are in the process of discovering what is the new cost of liquidity in the Trump era. This is something that shouldn't come as a surprise. Just looking at both the program, it's certainly very inflationary. Being European, we'll see what happens with tariffs. But on the other hand, at least we're grateful for our business. As we see this new cost of liquidity and potentially some dislocations.

Potentially. Potentially. And I think a tick here, we've been consistent there. In this scenario, you and I had the opportunity a few times to discuss that. And I know if it's down to 5% and all the symbolic year around that, you can go higher. It's always come down to supply demand and effectively the type of risk you are taking when you buy what is supposed to be a risk free security. I think the world has changed somehow and maybe the risk free rate is going up now. On one hand, you look at the private credit world and there is so much out there that's floating rate. Higher interest rates would bode well in that scenario. But if you have companies saddled with a higher cost of borrowing, then don't you have to worry about credit quality? Well, there is certainly part of that, but that will be very much the case for the companies who maybe have been a little bit levered junky over the past five, six years when the money was free. And now that you've got this money coming to you potentially in some part of the world or the markets where you have a slowdown, the topline or profitability because costs are rising. And that's what we are seeing now. On the other hand, I still view that this is an opportunity obviously for people involved in the private markets like us. But also for the situation where you would have to recapitalize part of this company. And that's true for corporates. It's obviously true for real estate, it's true for any part of the market that maybe was a little bit short memory in terms of how you approach your liabilities and the cost of funding.

Well, I'm certainly hearing that. But being a foreigner myself, as long as you can get into the United States. So we'll see how that plays out. But on a more serious note, I mean, clearly we see that this economy is taking Europe, Asia, the US, the Middle East. I'm just back from the Middle East. That is the driving force of the overall part of the business. We see that effect. Investors are taking less of a global listing approach than a very specific market focused allocation. So, yes, there is the Trump trade. And you commenting at length about that. But I also think that we should keep on a relative basis what type of risk you're taking for the return. What we do is relatively simple. That's what our investors, our asset allocators and asset owners are asking us to. And effectively a global platform makes us a more relevant, I think, a proposal between the differences.