Brian Sozzi: What are people still getting wrong about private markets?

John Cortese: I think that there is still an association with sub-investment grade. So when people talk about private credit, they're mostly referring to the sub-investment grade market. Still a big market, we are involved in that market. I think it's grown a lot over the last few years, and so that's why it's top of mind. But really it's grown also with the public markets pulling back. So public 2022 and 2023 issuance and high yield and leverage loans was down a lot. It happened to grow in private. But for us, we've been spending time on private IG since the ... 10, 15 years ago, since we really started to get involved in the retirement services business. But that market also way predates us. The banks have been doing this for decades. So it's really the driver of the broader economy. It's very diversified. It's generally secured. It's long-dated. It's really a very different asset class. So just thinking about private credit as a commodity is not the takeaway. You have to actually get into the weeds of what are you actually talking about. And for us, 38 of the 40 trillion is a private IG opportunity.

Brian Sozzi: I mentioned at the top of the show, we saw Tri-Color. We saw people concerned about what was happening with companies like that, just lower quality. How come that didn't spill over into the equity markets? We saw maybe a little pressure here and there, but we didn't get that spillover event that I think people worried about?

John Cortese: Yeah. At this stage in the economic cycle, you are seeing credit defaults happening, but they're not out-sized. Even if you look at projections for next year, most banks are calling for 2% defaults in high yield, maybe 3% at the upper end for leveraged loans. And if you look at the indices and the public indices, even though spreads are very tight, they're actually really, I would say, the breakup makes a lot of sense. 3% of the underlying indices trades at a thousand basis points or higher, and the rest of the market trade's really tight. High yield is mostly at a 150, 250 spread, except for those 5% of issuers trading at 1,000 plus. So the market's really efficient in saying these are businesses and business models that we think have to restructure. It's pricing it already that way. And of course, you're going to look at individual names when they do restructure as saying there's maybe something more to it, but the reality is the broader economy is really strong. Torsten's going to be on today talking about it.

Brian Sozzi: I can't wait to see Torsten. I hope he comes armed with 15 charts from me.

John Cortese: I think he's going to have more, maybe more than 15.

Brian Sozzi: Is investment grade right now still investment grade?

John Cortese: Sure. Yeah. I mean, not only is it rated investment grade, so that's by the actual letter of the definition. But you're talking about secured, low LTV, highly collateralized, first lean lending that's happening in very diversified formats. So it's a big market, but it's also, it's growing. Even at a two or 3% GDP growth, you're talking about a huge need for very safe lending, very low historical default rates, practically zero if you look at the history of Apollo and Athene. So yeah, it's still very much IG and it's actually growing because of, again, those big needs for ... Think about the big needs are also backed by governments or investment grade companies. These are the highest quality issuers of debt in the long run for the next few years, so it's really exciting.