Blackstone Inc. (NYSE:BX) Q2 2023 Earnings Call Transcript

Jonathan Gray: So it’s obviously tied to transaction volume. And as I said, we have begun to see a pickup, which should lead to an acceleration of deployment and credit. These things are tied together. And yes, when people get enthused about credit, the leveraged loan market could and should see more flows. But I do think there is a — on the direct lending side, a structural advantage of private credit because if you don’t need to distribute that, if you’re in the storage business, you can deliver to the borrower, the private equity sponsor price certainty. And that’s very hard for a financial institution who is selling it down and obviously wants to manage their risk. I think where it becomes more competitive, is on existing loans where somebody starts to look to refinance and when spreads tighten at some point, that’s where the leveraged loan market becomes more competitive or the high-yield market, if people believe that long rates have come down and spreads have come down.

But in the new origination business, that’s an area where I think direct lenders have a real sustainable advantage. It, I think, becomes more competitive for existing loans when at such time that the existing market tightens a fair amount. That hasn’t happened yet. But that could in a better market. But overall, transaction activity, to your point, is obviously tied to originations. And when both those things pick up, we think that’s a positive thing.

Operator: There are no additional questions in queue at this time.

Weston Tucker: Great. Thank you, everyone, for joining us today and look forward to following up after the call.