Brian Sozzi: I really enjoyed an op-ed you wrote recently on private markets. You've been beating the drum on this. You gave a really good presentation at Goldman Sachs today on this. What are some things that people are not understanding about private market shifts?

Marc Rowan: Well, I think there are two big things that I've really focused on. First, the definition of private credit. In much of the financial press, private credit means levered lending, a below investment grade, deal related activity. And the reality is most private credit is investment grade. And most of the credit in the financial system that is private, banks, insurers, pension funds, is investment grade. There's a whole discussion about what private investment grade is and why it exists, but its competition is public investment grade. And generally, it has outperformed public investment grade both in return and in safety. Put that to the side. Much of the press is focused, as I said, on this notion of levered lending. A levered lending a below investment grade activity comes in two flavors. One flavor is the broadly syndicated type, which is typically underwritten by banks and then distributed. The other is that which is underwritten by asset managers and is typically held and is sometimes called direct lending.

The big miss there is it's just an investment. It's like a stock or a bond. We don't think anything of Nvidia or the S&P going up or down 10 or 15%. And yet one private credit loan or one broadly syndicated loan defaults and people lose their mind. Why are people investing in levered lending? They're investing to reduce risk. Generally what investors are doing is they're taking money out of equity or out of high yield bonds and moving into levered lending. It's roughly the same return and it is less volatile. And if you hate levered lending, you're really going to hate high yield. And if you hate levered lending, you're really going to hate equity. This is a de risking activity and it is mostly conducted by investors who are seeking to de-risk. And I just leave it there. We could go on all day and just talk about private credit.

Brian Sozzi: When we saw some of those pressures for TriColor and First Band, why do you think that really didn't spill over into the broader stock market? We saw some convulsions, but it wasn't like that worrisome move. Why should it be?

Marc Rowan: Companies default all the time. I mean, in some of the materials that we will put out later today, you'll see 20 years of defaults in the investment grade market, the levered lending market, and the high yield market. Well underwritten credit, even if it defaults, usually has very strong recoveries. The notion that something defaulted. Okay, it defaults. The question is, was it a sign of something wrong in the economy? The answer from my point of view is no. This was just sloppy under running. In both those instances, the warning signs were there. It was avoidable. And by the way, both were underwritten in the banking system, in the form of broadly syndicated loans. Forget that that was not direct lending or asset manager driven direct lending. That was a factoid that people just didn't need.