Credit Exchange with Lisa Lee

“All roads lead back to AI,” says Matt Eagan, head of the full discretion team at Loomis Sayles & Company, in a special post-midterm election episode of Credit Exchange with Lisa Lee. Eagan, who oversees an $87 billion portfolio of fixed income and is a member of the firm’s board of directors, discusses how a dramatic shift in the political landscape could affect markets, inflation, interest rates, AI investment, and fixed income.
Eagan takes a contrarian view on the potential political headwinds from the election. He believes AI infrastructure investment will continue because both political parties view AI leadership as strategically important.
Eagan discusses why hyperscalers continue to dominate capital markets, and what investors should make of mounting debt issuance across the AI ecosystem. The conversation also dives into Federal Reserve independence, fiscal policy, geopolitical risks, and the growing divide between AI ‘whales’ and ‘guppies’ competing for capital.

Capital structures that are currently being created with lower leverage, in an environment where interest rates are not zero, will likely make for an excellent vintage, says Stephen Ketchum, founder and CEO of Sound Point Capital Management, a global credit specialist with USD 45bn in assets under management, on the latest episode of Credit Exchange with Lisa Lee.
Ketchum discusses the macro economy, inflation (and his long-held contention that we are in a higher-for-longer environment), and artificial intelligence.
“I get more concerned about the cost of our federal debt, which is ballooning,” he says. “That to me is of more concern than the implications it has for the cost of capital for the companies that we lend to.”
The addressable market for AI, and the ability to finance data centres and the ecosystem around them, is monumental. Ketchum says he has tended to be somewhat cautious regarding Sound Point’s consideration of data centre or GPU financing, and the firm has elected to focus instead on the businesses that derive benefits from the data centres. There will be winners and losers, and Ketchum explains how he is already distinguishing between them.
“There’s counterparty risk; there’s geographic risk; there’s all sorts of fundamental credit things to think about” in relation to data centres, he notes. “And then, perhaps most importantly, there’s documentation.”

This week, a special edition of Credit Exchange. Over the last couple of weeks, host Lisa Lee has been attending the ABS East conference in Miami, and the CAIS Alternative Investment Summit in Beverly Hills, to understand the key dynamics currently unfolding in credit.
On this week’s podcast, we hear from Robert Zable, global head of CLOs at Guggenheim Partners; Jared Parker, co-head of North America at Oaktree Capital Management; and Tom Majewski, co-founder and CEO of Eagle Point Credit Management. They share their insights on inflation, artificial intelligence, and the current shape of credit markets.

“We’re in the trenches and the front lines of doing this,” says Sandor Hau, head of credit and managing partner at private equity firm Charlesbank Capital Partners, on the latest episode of Credit Exchange with Lisa Lee. Hau says he has been buying illiquid private credit loans for decades.
The buying and selling of private loans is still a niche and idiosyncratic play. But trading is accelerating as the private credit market expands in size and its liquidity needs grow. Private equity firms have the option to put certain firms into what are known as “disqualified lists”, and those lists are increasing. But that hasn’t materially impacted how Charlesbank buy and sells loans versus a year ago, or even half a decade ago.
Hau also speaks about his expectations for more private credit bankruptcies, artificial intelligence in private markets, and current LP mood.
Charlesbank was spun out of the Harvard University endowment nearly 30 years ago.

“Right now everything seems very elevated in the private market. So all the more, ‘stock picking’ as venture capitalists is really important,” says Eric Kim, co-founder of Goodwater Capital, on the latest episode of Credit Exchange with Lisa Lee. Goodwater is a global venture capital firm that counts no fewer than 17 ‘unicorns’ amongst its investment successes, including such storied names as TikTok (via musical.ly), Spotify, Monzo and Kakao.
M&A is hot right now, says Kim. Incumbent companies with large market caps and strong cash positions are looking to acquire to have that next AI story and are getting rewarded by the Street. “That over time... being able to use your war chest if you built out as a Fortune 500 company is well worth it,” says Kim on purchasing AI companies and teams. “I think there's a lot of knocking on the doors right now.”
It’s an exciting moment to be investing in startup since AI applications are just getting started. “Software is going to be completely rewritten right now, it's like a blank slate, and that is exciting on all levels,” says Kim. “We can connect the dots to something that is way bigger than we ever imagined before.
He contends that venture capital involves an element of suspending disbelief. “[For] our team, we emphasise you really need to first suspend disbelief, dream the dream – and then pressure-test from there to see, is this plausible or not?”
“How do they want to build a product? We have to accept that it won’t be perfect. And the resilience that they have as entrepreneurs is even more so,” he says. “So do they have a data model? Are they creating a product that will be trusted over time? And is this a team that we see, long-term, is going to build a generational company? Generally, if you see those three things, we’re willing to suspend disbelief. We have to do that within venture capital.”
The landscape for venture capital has shifted in an important way, with the market becoming more sophisticated in providing liquidity solutions and become more institutionalised.
“It’s an ‘and’ now. It used to be M&A, IPO or nothing. But now... there’s also this institutionalisation of the venture capital asset class. I think it’s healthy, actually, because you have more players, you have more different liquidity solutions, [and] you have big secondary funds coming in market as well. And that offers the ability for both liquidity in the midterm, but outsize outcomes in the long-term as well.”
Kim also discusses regulation and ethical issues surrounding AI, Goodwater’s notable investment successes, and current equity market volatility.