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Broken Pie Chart


Jul 3, 2021

Dan McMullen Senior Managing Director and Senior Portfolio Manager in Blackstone’s Credit Liquid Credit Strategies Unit, SPDR Blackstone Senior Loan ETF (Symbol: SRLN) joins the podcast to explain what senior loans are. How senior loans compare to leveraged loans and CLOs or collateralized loan obligations. Plus, Dan explains what the risks are, how they compare to high yield bonds, and what happens in the event of bankruptcy. Later Dan gets into how loans trade and are priced plus whether they are based on SOFR, LIBOR, or something else. What types of covenants or restrictions do investors put on companies accessing these markets? What type of companies use senior loans and why this instrument versus equity or bonds. Dan McMullen also is a member of Blackstone Credit’s LCS Management, LCS US Syndicated Credit, Global Structured, and Asset Allocation investment committees. 

 

 

What are senior loans?

Senior Loans versus Leveraged Loans

What are CLOs (Collateralized Loan Obligation)

What types of collateral do companies put up against loans?

Where do senior loans site on the balance sheet?

Where do ongoing interest payments sit on the income statement?

What happens if companies go bankrupt?

What is a typical recovery percentage on loans in default?

Is the industry transitioning away from Libor and to SOFR?

Effect of interest rates on existing and future issuance of senior loans

Where do senior loans sit in the capital structure

Why companies use senior loan markets

Senior loans during the worst of Covid

Prices of loans versus prices of high yield bonds

Recovery rates on loans versus high yield bonds

How loans in bankruptcy can be sold

Amortization in senior loans

Restrictions or covenants put on senior loan issuers

 

Mentioned in this Episode:

 

More on Dan McMullen and senior loans ETF https://www.ssga.com/us/en/institutional/etfs/funds/spdr-blackstone-senior-loan-etf-srln

 

Marcel Benjamin deconstructs High Yield Bonds and What are Zombie Companies https://podcasts.apple.com/be/podcast/marcel-benjamin-high-yield-bonds-explained-what-are/id1432836154?i=1000517760353

 

Derek Moore book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=tmm_hrd_swatch_0?_encoding=UTF8&qid=&sr=