Credit Exchange with Lisa Lee

“We have ample liquidity,” says Dan Leiter, head of international at Blackstone Credit & Insurance, on the latest episode of Credit Exchange with Lisa Lee, as he explained the firm’s decision to honour all withdrawal requests at its private credit perpetual fund.
“[As a result] it was not an issue to honour the redemption, and we thought it was the right thing to do,” says Leiter. Competitors – some of whom capped redemptions at 5% – made assessments and opted for what was right for their vehicles. “They also have different liquidity profiles. They have different considerations,” he adds.
Leiter also addresses whether retail investors understood the terms of these perpetual funds, and says he has heard of no complaints from retail investors about being capped.
The negative headlines, which have more of an impact on retail investors, should wane soon. “When we look back in just a few months’ time, I don’t think it will take that long. Everyone will see that actually, the return profile in private credit remains really attractive, especially versus liquid credit,” predicts Leiter, who is also global head of liquid credit at the asset manager, which boasts around $1.3 trillion in AUM.
Shifting gears, Leiter says that everything that’s happening around AI is real, and there will be a lot of disruption. But, so far, Leiter says that Blackstone’s credit portfolios are performing well.
He isn’t seeing any major stress in Blackstone’s portfolio companies. But “that doesn’t mean there won’t be idiosyncratic defaults here and there,” he cautions.
Private credit default rates remain in line with, or even lower than, the publicly-traded leveraged loan market, and Leiter believes recoveries will be higher than for leveraged loans as well.
He also discusses opportunities in Asia, investment-grade private credit, and insurance; he also provides insights into growth prospects in the US, Europe and Asia, against the backdrop of the Iran war.

Global economies are adjusting to the oil shock from the Iran war, says Juhi Dhawan, macro strategist at Wellington Management, on the latest episode of the Credit Exchange podcast with Lisa Lee – and China has shown surprising resilience that may improve its competitiveness against Europe, Japan and some other Asian countries.
Looking at the past performance of economies and markets to oil shocks, one of the surprises this time has been China, Dhawan says. It has held up better because it has reduced its reliance on oil due to its big push into renewables and coal. That’s good news in that China is a big driver of global growth, but less good in that China is already in a very competitive position from a manufacturing standpoint relative to Europe, Japan, and some other countries in south-east Asia.
“One of the questions we are asking ourselves is, will China again gain competitiveness as Europe struggles with this energy shock; as Japan faces this energy shock,” Dhawan says. “[Will] China end up being relatively better off compared to what its past would have suggested?”
Dhawan, who leads analysis of the US economy at Wellington, an asset manager with more than $1.3 trillion in AUM, says the United States came into 2026 with some of the most accommodative fiscal and monetary policy set-up in a few years. That creates some buffer room for the economy to withstand these higher energy prices.
Besides energy prices, Dhawan also discusses productivity gains from AI, the labour market, trade flows and demographics. In addition, financial markets are reacting to the Iran war, resulting in adjustments. There could be boosts coming into AI-related areas, power, and energy, she says.

“The doomsday scenario is a complete over-exaggeration,” says David Manlowe, CEO of Benefit Street Partners, on the latest episode of Credit Exchange with Lisa Lee. Manlowe asserts that investors will have time to see the impact of artificial intelligence, which could even help boost margins at software firms.
“I don’t see a big company like, for example, Franklin Templeton, ripping out their core software system in the next couple of quarters.”
The average level of exposure is around 22-23% for BDCs, Manlowe says, but among funds, there’s huge disparity. If one drew a histogram of all private credit BDCs and their ownership of software, it would range from funds focused on technology at up to 70%, while others are at 2%. BSP, the $94 billion alternative credit business inside Franklin Templeton, has around 9.5% exposure to software.
Where the rubber really hits the road, is not in performance this quarter or next quarter, but when these companies have to refinance their debt, Manlowe notes. And that doesn’t really start until the second half of next year.
That said, there will be some early indicators in the earlier part of the year, and every quarter to follow. “You could see, over the next few quarters, an extended period of time where some of these software companies actually see a fairly significant margin expansion, because they’re so much more efficient at how they’re writing code and deploying code, so on and so forth.”
This raises a key question – how wide, and how deep, is the moat around a given software application?
On the recent withdrawals from semi-liquid private credit funds, Manlowe believes the design of the product was very thoughtful around the asset class. The 5% cap ensures what’s going into the funds actually has a duration that is shorter and can fund the redemptions.
“That five percent per quarter wasn’t a made-up number,” he says. “There’s something I learned through all this – maybe we didn’t educate as much as we should.
“Let’s get back out educating the investor base. It’s not a product design flaw.”
On the Iran war, Manlowe predicts it will have an impact on short-to-intermediate-term inflation. He is upbeat about the prospects for floating-rate credit markets in particular: “[The] underlying economy, both in the US and Europe, should be conducive to the companies that we lend to, and the companies in the market performing reasonably well.”

“We are going to see consumer pain, and particularly on the lower-income side of things,” says David Saitowitz, head of US liquid credit at ICG, a global alternative asset manager with $127 billion in AUM, on the latest Credit Exchange podcast with Lisa Lee.
That means certain sectors could get hurt while others do very well, he says, adding that it’s a trend he’s already seeing. Anything consumer related – whether it’s housing, travel, to apparel and retail, are under pressure.
“Those areas, I think, are all feeling a decent amount of pain, and I think they will continue [to].”
Saitowitz is especially worried about housing, as rates stay higher for longer. The economics around housing continue to be weak and that has real implications for people everywhere, he observes.
He also notes that we are in an interesting time where, with a massive technological innovation underway, that factor could be overshadowing geopolitical events which may have been considered in a more serious way previously.
On artificial intelligence, ongoing new advancements will lead to difficulties for software firms, he believes, especially those that were over-levered and need to refinance soon. “We will see some LMEs; we will see some bankruptcies,” he says.
And when that does happen, he adds, recent history suggests recoveries will probably be worse than we have seen in some time.
But that said, there’s plenty of companies that will do just fine, and Saitowitz doesn’t believe there will a widespread or massive spike in defaults.

Private credit firms, including Hayfin, are still willing to lend to software companies, says Marc Chowrimootoo, co-head of direct lending at alternative asset manager Hayfin, on the latest episode of the Credit Exchange podcast with Lisa Lee.
“If that call comes in, we absolutely take that call,” says Chowrimootoo, on how he responds to a request from a private equity fund for a software LBO financing. “We absolutely give it the due care and attention.”
But the willingness to partake has moderated, he adds. “Everyone is being much more judicious.”
There are a number of questions you can go through with a private equity buyer who understands what they’re doing, Chowrimootoo says. For example: how can I understand why this is more insulated than others out there? How embedded is this platform with its customers? What’s different about the ownership of data in this particular asset? What’s the protected moat around the end customer, and the usage of this in the technology?
Regarding software exposure more broadly in the private credit market, Chowrimootoo notes that Europe has less exposure compared to their counterparts in the US. In addition, while retail capital is a huge portion of the US market, European private credit funds have less than EUR 10bn in retail vehicles.
On the geopolitical front, Chowrimootoo says Europe has had to deal with many periods of volatility. “It’s way too soon to be making a judgment on where the direction of travel is on credit spreads; where the direction of travel on default levels are; where the direction of travel is on stress of earnings.”