Since the beginning of the year, profit margins have increased for the Magnificent Seven and declined for everyone else, see chart below.
K-Shaped Economy Also for Corporates
Credit Cycle Improving
The weekly data for bankruptcy filings shows a clear downtrend in recent months, see chart below.
Rising Number of Public Companies Taken Private
The number of publicly listed companies has declined by 50% since the mid-1990s, and there is a rising trend in the number of public companies that are taken private, see chart below.
Significant Needs for Investment Globally in Clean Energy
Global investment in clean energy is rising, and Europe is accounting for the biggest share, see charts below.
Apollo Answers: What’s Missing in Private Credit? Integrating Asset-Backed Finance
Private credit is taking on a larger, more important role in capital markets, opening the door for investors to evolve their strategic asset allocations. Combining the collateral-backed security of asset-backed finance with the capital structure seniority and control of direct lending can enhance diversification and give investors a broader, more resilient opportunity set.
Key Takeaways
- Regional bank consolidation and increased bank regulatory pressure have reduced balance-sheet lending appetite creating white space across both corporate and specialty-finance borrowers.
- Sponsors, corporates and specialty finance companies seek financing that matches their assets or cash flows, with diversification away from traditional lenders.
- Private credit’s yield, structure, and seniority characteristics have broadened its role in portfolios—asset-backed finance and direct lending address different parts of that demand set.
The information herein is provided for educational purposes only and should not be construed as financial or investment advice, nor should any information in this document be relied on when making an investment decision. Opinions and views expressed reflect the current opinions and views of the authors and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information.
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The Standard & Poor’s 500 (“S&P 500”) Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies by market value.
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Hyperscaler Capex Spending
Hyperscalers are currently spending a record high 60% of their operating cash flow on capex, see chart below.
5,426 Data Centers in the US
There are about 5,500 data centers in the US, and in Germany there are 529, see chart below. The bottom line is that the rest of the world is far behind the US when it comes to AI.
High Yield Index Duration Declining
High yield index duration has declined significantly for three reasons:
1) After the Fed raised rates in 2022, and the entire yield curve shifted higher, issuers became reluctant to lock in high coupons for extended periods, instead opting for three- to five-year maturities.
2) Stronger balance sheets and upgrades have raised the average credit rating for high yield, indirectly reducing duration because higher-quality issuers usually issue shorter-term paper, see the second chart.
3) Higher yield levels compress duration mathematically, and a bond’s modified duration declines as its coupon rises, even if the maturity structure is constant.
Distribution of Mortgage Rates
Twenty percent of mortgages outstanding have an interest rate above 6%, see chart below.
What’s Driving the Shift in Portfolio Construction: Private Credit, Private Equity, and the New Market Reality
In this episode of The View From Apollo, Apollo Global Head of Product Akila Grewal breaks down why private credit’s growth reflects fundamentals, not froth, and how investors are evolving their portfolios to balance liquidity, yield, and long-term opportunity across private markets.