June 4, 2025 • 8 mins
The largest opportunity emerging in private credit is investing in investment grade assets, according to Jim Zelter, president of Apollo Global Management. Speaking to Bloomberg’s Kriti Gupta at SuperReturn International, a private capital conference in Berlin, Zelter said that about three-quarters of Apollo’s assets are placed in the investment-grade market.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. I think you'd agree
that this is the place to be in Europe today.
Speaker 2 (00:10):
My first I've been to Berlin many times, but my
first time at Super Return and it's wonderful to be here,
and it is It is ironic how the breadth of
players here at Super Return. It used to be really
a private equity conference and now it really is a
conference of all players in the credit markets and the
capital markets and in the equity market.
Speaker 1 (00:27):
So thank you, of course, we're thrilled to hear what
you have to say. Now this is fascinating as well
because we talk about this from an Astha Coast perspective.
We'll get to that in a moment. Let's talk about
the overarching trade. We're based in London, you're based in
the US as well. We're talking a lot about whether
or not this kind of exit perhaps or at least
this moment that Europe has had in the sun actually
lasts give us the bold case for Europe here.
Speaker 2 (00:49):
Well, we've been in Europe for twenty twenty five years.
We probably have one hundred billion of our eight hundred
billion here in Europe today.
Speaker 3 (00:54):
And whether it's a poll.
Speaker 2 (00:57):
Domestically or a push from the current administration, and there's
certainly a revitalized enthusiasm about investing in Europe. I had
at dinner last night with twenty financial players, and the
amount of US investors that are looking to invest in
Europe is very real and palpable, you know, for us
with our financing toolbox and our high grade capital solutions.
(01:20):
In reality, most of our transaction over the last two
years have been in Europe, Intel in Ireland, Venovia, here
in Germany and France. So you know, we've seen it
for the last few years where on the global stage,
the leaders, the national leaders in industry and energy transition
and utilities and manufacturing, they want to be competitive globally
(01:42):
and they're looking for more tools to be able to
play in a bigger game.
Speaker 1 (01:48):
How much of that, though, is a structural ball case
for Europe as opposed to a reaction function to perhaps
the volatility emanating out of the United States.
Speaker 2 (01:56):
We don't spend as much time thinking about whether it's
a pull or push on the ground when we see
activity from national champions in industry, and we see it
with industrial players, and we see it with financial players,
and we see it with government entities. Certainly in Germany
you're seeing it right now with this current administration, a
(02:16):
real pull. But we see palpable signs, lots of green shoots,
of great enthusiasm, and certainly there's a variety of things
you'd like to change, but for our perspective right now,
it's a wonderful place to do business.
Speaker 1 (02:29):
How much of that, though, gets a stamp of approval
or a little bit of backing because the fiscal spend
from government and so, I mean it feels like Germany's
bullcase has been a big piece of that. But is
it just Germany that's kind of holding europe afloat at
the moment?
Speaker 2 (02:42):
Well, I think in Germany it's very easy. This is
a four trillion economy. Their goal is to get to
be a six trillion economy over the next ten to
twelve years. We're prepared to put an over one hundred billion.
Speaker 3 (02:52):
Of capital from our financing tools.
Speaker 2 (02:54):
And I really say that in terms of capital, mostly
investment grade financing and a variety.
Speaker 3 (02:59):
Of dancing tools.
Speaker 2 (03:00):
But in Germany, because of the size and scale and
their prominence in the European marketplace.
Speaker 3 (03:06):
They are a leader.
Speaker 2 (03:07):
But we're seeing enthusiasm happening right now in the Nordics.
We're seeing enthusiasm happening in France to a certain degree.
Obviously different industries, but it's a palpable.
Speaker 3 (03:18):
Change that we want to be part of, and I
think that for.
Speaker 2 (03:20):
Our perspective, we are a large player here, but in
the world of private capital and the private credit, it's
an opportunity that we see as one of the brighter
ones around the globe. Right now.
Speaker 1 (03:32):
You mentioned private credit. You took me right there. There's
a lot of concern in this market right now because
of the optimism and private markets generally, but also the
financing and the deals that are coming from the credit
space specifically. So maybe it's gone a little bit too far.
You've heard warnings echoed from some of the giants of finance.
Walk us through what a red flag might look like
in that space.
Speaker 3 (03:51):
Well, we've been fortunate. We've not had a real recession in.
Speaker 2 (03:54):
The US for several years, a very long period of time.
I will point out out that you know, a place
like Australia really hasn't had a recession since the early nineties,
but certainly there's been a tremendous growth of a variety
of credit markets, whether it's investment grade, high yield, direct lending.
And I think we have to differentiate between a credit
(04:17):
cycle and industries where there may be an overabundance or
an over enthusiasm. So certainly what's going on right now
with in DC with reimbursement, the whole area of healthcare
and medical reimbursement, you want to make sure that you
don't are not overly concentrated to anyone player or anyone
provider in the in the enterprise software business, a lot
(04:40):
of concern about technology change and technology innovation and light
of AI, and certainly also you want to make sure you.
Speaker 3 (04:46):
Don't have a concentrated business.
Speaker 2 (04:48):
So those are really red flags that would be the
case in any credit cycle, but certainly as we are
a bit long in the tooth in the cycle, you
have to be more focused on at this point in time.
Speaker 1 (04:57):
You mentioned the risk out of Washington, DC specific connect
the dots force in terms of those deficit concerns out
of DC to the private credit space. How quickly do
you see an.
Speaker 2 (05:05):
Effect, Well, you know, right now, while the tariffs and
Liberation Day got a lot of the headlines, the market forces,
the so called Bob Benje Lantis have woken up those
to the concern about the growing deficit in the United States.
So in the marketplace right now, with a little bit
slower growth and some concern a lot of hand ringing,
the deficit issue is taken the main stage versus the
(05:28):
impact of the tariffs. Now this administration, we can't get
too comfortable.
Speaker 3 (05:32):
There can be a headline in the next few minutes.
Speaker 2 (05:34):
It changed that, But right now the big focuses on
rates and the deficit obviously is the current administration is
focusing on their big, beautiful bill.
Speaker 1 (05:44):
When it comes to kind of the folks you're speaking
to here in Berlin or around the world, how does
that sentiment you just laid out affect perhaps the nervousness
in terms of credit lending, but also kind of in
the equity space as well. Are you seeing some of
that nervousness rise.
Speaker 3 (05:58):
To the top? I think there.
Speaker 2 (06:01):
You know, we've been very clear about the role that
we play as a broad based capital provider, and I
think that when you see the macro headlines right now,
your calibration of risk on levered equity needs to be
a bit higher.
Speaker 3 (06:15):
But at the same token, you have real rates.
Speaker 2 (06:17):
You know, for four percent plus on nominal rates in
the US right now, and for our perspective as a
credit lender, you're getting paid for the first time in
the last fifteen years. So it's a wonderful time to
be a player on credit. But at the same time,
I do think there's appropriate caution with buying equity at
the bottom of a levered capital structure.
Speaker 1 (06:36):
So in the public market, there's a conversation here about
holding onto cash, holding onto capital, being on the front
end of the curve to kind of have that liquidity.
Private markets offer the opposite.
Speaker 3 (06:46):
It's fairly a.
Speaker 1 (06:47):
Liquid it's not as easily tradable. It's a more long
duration asset with the depths of concerns. A lot of
folks are pulling out of that. Are you telling me
that that's not bubbling to the surface.
Speaker 2 (06:57):
Well, I think again, private credit is is a much
broader ocean of opportunities where a lot of the things,
a lot of the issues you mentioned, they're really focused
on the non investment grade side, which is a one
point five trillion dollar marketplace of direct lending. The larger
opportunity when we're more focused as a firm and three
(07:17):
quarters of our assets are on the investment grade side,
so a different setup with regard to the underlying credit metrics,
mostly investment grade, mostly top of the capital structure, and
with rates are where they are right now. Again, people
don't tep typically buy spreads, but they buy yields and
reels yields are quite strong right now, so appropriate commentary
(07:40):
and concern about the non investment grade marketplace, and certainly
a lot of concern about levered capital structures, subordinated paper
pick payments and things of that nature which we've avoided.
We're clearly leading massively into the investment grade side of
the world of private capital. And I would say also
in the past a lot a lot of the issues
(08:00):
you brought up in the past, Historically private has been
risky and in liquid and public has been safe and liquid.
Speaker 3 (08:07):
We would really challenge that
Speaker 2 (08:09):
Convention, and we're seeing it more and more on these
investment great opportunities that we've been a leader and owner
of
Bloomberg Audio Studios, podcasts, radio news. I think you'd agree
that this is the place to be in Europe today.
Speaker 2 (00:10):
My first I've been to Berlin many times, but my
first time at Super Return and it's wonderful to be here,
and it is It is ironic how the breadth of
players here at Super Return. It used to be really
a private equity conference and now it really is a
conference of all players in the credit markets and the
capital markets and in the equity market.
Speaker 1 (00:27):
So thank you, of course, we're thrilled to hear what
you have to say. Now this is fascinating as well
because we talk about this from an Astha Coast perspective.
We'll get to that in a moment. Let's talk about
the overarching trade. We're based in London, you're based in
the US as well. We're talking a lot about whether
or not this kind of exit perhaps or at least
this moment that Europe has had in the sun actually
lasts give us the bold case for Europe here.
Speaker 2 (00:49):
Well, we've been in Europe for twenty twenty five years.
We probably have one hundred billion of our eight hundred
billion here in Europe today.
Speaker 3 (00:54):
And whether it's a poll.
Speaker 2 (00:57):
Domestically or a push from the current administration, and there's
certainly a revitalized enthusiasm about investing in Europe. I had
at dinner last night with twenty financial players, and the
amount of US investors that are looking to invest in
Europe is very real and palpable, you know, for us
with our financing toolbox and our high grade capital solutions.
(01:20):
In reality, most of our transaction over the last two
years have been in Europe, Intel in Ireland, Venovia, here
in Germany and France. So you know, we've seen it
for the last few years where on the global stage,
the leaders, the national leaders in industry and energy transition
and utilities and manufacturing, they want to be competitive globally
(01:42):
and they're looking for more tools to be able to
play in a bigger game.
Speaker 1 (01:48):
How much of that, though, is a structural ball case
for Europe as opposed to a reaction function to perhaps
the volatility emanating out of the United States.
Speaker 2 (01:56):
We don't spend as much time thinking about whether it's
a pull or push on the ground when we see
activity from national champions in industry, and we see it
with industrial players, and we see it with financial players,
and we see it with government entities. Certainly in Germany
you're seeing it right now with this current administration, a
(02:16):
real pull. But we see palpable signs, lots of green shoots,
of great enthusiasm, and certainly there's a variety of things
you'd like to change, but for our perspective right now,
it's a wonderful place to do business.
Speaker 1 (02:29):
How much of that, though, gets a stamp of approval
or a little bit of backing because the fiscal spend
from government and so, I mean it feels like Germany's
bullcase has been a big piece of that. But is
it just Germany that's kind of holding europe afloat at
the moment?
Speaker 2 (02:42):
Well, I think in Germany it's very easy. This is
a four trillion economy. Their goal is to get to
be a six trillion economy over the next ten to
twelve years. We're prepared to put an over one hundred billion.
Speaker 3 (02:52):
Of capital from our financing tools.
Speaker 2 (02:54):
And I really say that in terms of capital, mostly
investment grade financing and a variety.
Speaker 3 (02:59):
Of dancing tools.
Speaker 2 (03:00):
But in Germany, because of the size and scale and
their prominence in the European marketplace.
Speaker 3 (03:06):
They are a leader.
Speaker 2 (03:07):
But we're seeing enthusiasm happening right now in the Nordics.
We're seeing enthusiasm happening in France to a certain degree.
Obviously different industries, but it's a palpable.
Speaker 3 (03:18):
Change that we want to be part of, and I
think that for.
Speaker 2 (03:20):
Our perspective, we are a large player here, but in
the world of private capital and the private credit, it's
an opportunity that we see as one of the brighter
ones around the globe. Right now.
Speaker 1 (03:32):
You mentioned private credit. You took me right there. There's
a lot of concern in this market right now because
of the optimism and private markets generally, but also the
financing and the deals that are coming from the credit
space specifically. So maybe it's gone a little bit too far.
You've heard warnings echoed from some of the giants of finance.
Walk us through what a red flag might look like
in that space.
Speaker 3 (03:51):
Well, we've been fortunate. We've not had a real recession in.
Speaker 2 (03:54):
The US for several years, a very long period of time.
I will point out out that you know, a place
like Australia really hasn't had a recession since the early nineties,
but certainly there's been a tremendous growth of a variety
of credit markets, whether it's investment grade, high yield, direct lending.
And I think we have to differentiate between a credit
(04:17):
cycle and industries where there may be an overabundance or
an over enthusiasm. So certainly what's going on right now
with in DC with reimbursement, the whole area of healthcare
and medical reimbursement, you want to make sure that you
don't are not overly concentrated to anyone player or anyone
provider in the in the enterprise software business, a lot
(04:40):
of concern about technology change and technology innovation and light
of AI, and certainly also you want to make sure you.
Speaker 3 (04:46):
Don't have a concentrated business.
Speaker 2 (04:48):
So those are really red flags that would be the
case in any credit cycle, but certainly as we are
a bit long in the tooth in the cycle, you
have to be more focused on at this point in time.
Speaker 1 (04:57):
You mentioned the risk out of Washington, DC specific connect
the dots force in terms of those deficit concerns out
of DC to the private credit space. How quickly do
you see an.
Speaker 2 (05:05):
Effect, Well, you know, right now, while the tariffs and
Liberation Day got a lot of the headlines, the market forces,
the so called Bob Benje Lantis have woken up those
to the concern about the growing deficit in the United States.
So in the marketplace right now, with a little bit
slower growth and some concern a lot of hand ringing,
the deficit issue is taken the main stage versus the
(05:28):
impact of the tariffs. Now this administration, we can't get
too comfortable.
Speaker 3 (05:32):
There can be a headline in the next few minutes.
Speaker 2 (05:34):
It changed that, But right now the big focuses on
rates and the deficit obviously is the current administration is
focusing on their big, beautiful bill.
Speaker 1 (05:44):
When it comes to kind of the folks you're speaking
to here in Berlin or around the world, how does
that sentiment you just laid out affect perhaps the nervousness
in terms of credit lending, but also kind of in
the equity space as well. Are you seeing some of
that nervousness rise.
Speaker 3 (05:58):
To the top? I think there.
Speaker 2 (06:01):
You know, we've been very clear about the role that
we play as a broad based capital provider, and I
think that when you see the macro headlines right now,
your calibration of risk on levered equity needs to be
a bit higher.
Speaker 3 (06:15):
But at the same token, you have real rates.
Speaker 2 (06:17):
You know, for four percent plus on nominal rates in
the US right now, and for our perspective as a
credit lender, you're getting paid for the first time in
the last fifteen years. So it's a wonderful time to
be a player on credit. But at the same time,
I do think there's appropriate caution with buying equity at
the bottom of a levered capital structure.
Speaker 1 (06:36):
So in the public market, there's a conversation here about
holding onto cash, holding onto capital, being on the front
end of the curve to kind of have that liquidity.
Private markets offer the opposite.
Speaker 3 (06:46):
It's fairly a.
Speaker 1 (06:47):
Liquid it's not as easily tradable. It's a more long
duration asset with the depths of concerns. A lot of
folks are pulling out of that. Are you telling me
that that's not bubbling to the surface.
Speaker 2 (06:57):
Well, I think again, private credit is is a much
broader ocean of opportunities where a lot of the things,
a lot of the issues you mentioned, they're really focused
on the non investment grade side, which is a one
point five trillion dollar marketplace of direct lending. The larger
opportunity when we're more focused as a firm and three
(07:17):
quarters of our assets are on the investment grade side,
so a different setup with regard to the underlying credit metrics,
mostly investment grade, mostly top of the capital structure, and
with rates are where they are right now. Again, people
don't tep typically buy spreads, but they buy yields and
reels yields are quite strong right now, so appropriate commentary
(07:40):
and concern about the non investment grade marketplace, and certainly
a lot of concern about levered capital structures, subordinated paper
pick payments and things of that nature which we've avoided.
We're clearly leading massively into the investment grade side of
the world of private capital. And I would say also
in the past a lot a lot of the issues
(08:00):
you brought up in the past, Historically private has been
risky and in liquid and public has been safe and liquid.
Speaker 3 (08:07):
We would really challenge that
Speaker 2 (08:09):
Convention, and we're seeing it more and more on these
investment great opportunities that we've been a leader and owner
of
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