Gundlach at The Plaza: How Private Credit Hides Its Losses
Private credit features in many wealth portfolios, and the segment focuses on how default reporting and PIK mechanics can shape the credit quality investors see. It offers a manager's view on where markdowns may still be pending.
Summary
By the private credit deskAt DoubleLine's September client event at The Plaza Hotel in New York, CEO-CIO Jeffrey Gundlach and Deputy CIO Jeffrey Sherman discuss the private credit market and the outlook for real markdowns. Gundlach argues that the reported 6.3% default rate understates the real picture because it excludes payment-in-kind (PIK) loans, where a missed interest payment is added to the loan's principal and the loan is reported back as a performing asset.
- Gundlach and Sherman discussed private credit and the outlook for real markdowns.
- Gundlach argued the reported 6.3% default rate understates the real picture because it excludes PIK loans.
- He called PIK "the most insidious thing you could possibly imagine," describing how a missed interest payment gets added to principal and reported back as a performing asset.
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