In conversation with managing director Diana Sands and partner Alex Wright, Jim Vanek discusses how lending conditions before and after 2022 differ structurally and why disciplined portfolio construction, conservative leverage and stronger documentation are becoming increasingly important as the cycle evolves.
Q&A Summary
Jim: We’re primarily lending on a bilateral basis where we’re taking a senior secured position, focused on large-cap companies generating more than $100 million of EBITDA, though our portfolios skew higher.
There are two reasons for that focus. First, larger businesses tend to be more defensible. Over time we’ve found these are better credits, particularly in a downturn, as they are often category leaders.
Second, the opportunity emerged as financing markets evolved around 2018–2019. As bank lending dynamics shifted, institutions like us gained access to opportunities that weren’t previously available.
Alex: Let’s go back to 2022 as a line of demarcation between old and new vintages. Given that, how has the market evolved since then to where we are today?
Jim: In 2022, higher base rates combined with wider spreads made returns more attractive compared to prior periods.
Before 2022, base rates were near zero, so leverage and debt service looked very different. Companies were operating in a fundamentally different environment than the one we’ve had for the past several years.
What made the 2022–2024 vintages compelling wasn’t just return, it was structure—lower leverage and more subordinated capital beneath us.Coming out of that period, strong demand for yield reduced some of those protections.
That’s why in 2025, despite significant deployment, we passed on a large portion of opportunities., What’s exciting now is that cost of capital has reset. We’re seeing the potential to lend at attractive spreads with better structures and tighter documentation. That creates a more compelling forward opportunity.
We’re seeing the potential to lend at attractive spreads with better structures and tighter documentation. That creates a more compelling forward opportunity.
Diana: How do you think about going on offense while maintaining flexibility when others may be more defensive?
Jim: There are several differences in how we approach credit. One is alignment—we invest alongside our clients on our balance sheet, which directly impacts our investment decisions.
We want to invest the most when returns are wide, documentation is tight and leverage is lower. That environment is becoming more likely based on recent developments.
We feel strongly about our underwriting and the companies we lend to—sector leaders with strong liquidity, flexible cost structures and consistent margins.
Markets are reflecting concern, particularly around service-based companies. While we’re not changing how we underwrite, we are demanding better returns and stronger structures, especially in industries facing more disruption.
Our funds are not designed to outperform in the best environments. They are designed to perform in less stable periods.
Alex: When you zoom out and compare Apollo to peers, what differentiates the platform?
Jim: Our funds are not designed to outperform in the best environments. They are designed to perform in less stable periods.
Running lower leverage may underperform in perfect markets, but it positions us to take advantage of dislocations. That philosophy has been consistent over time and is a key differentiator versus peers.
Q&A is edited for clarity
This interview is part of the "Inside Apollo's Private Credit Platform" series, featuring perspectives from Apollo partners. View all interviews.
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