Apollo to Build Out Trading Desk for Private Credit Loans

Carmen Arroyo and Libby Cherry
2-min read
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(Bloomberg) -- Apollo Global Management Inc. is planning to build out a trading desk that will buy and sell direct loans in the normally illiquid $1.7 trillion private credit market.

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Plans for the secondary trading business are preliminary and Apollo may decide to not pursue them, according to people familiar with the matter, who asked not to be identified as the details are private. An Apollo representative declined to comment.

The credit giant’s potential push into trading direct loans would follow similar moves by others in the industry. They include Golub Capital, which traded about $1 billion of the debt through the first half of the year, JPMorgan Chase & Co., which is already becoming a market maker after facilitating several billion dollars worth of private trades, as well as established players like Antares Capital.

Despite the recent rush to create a market where direct loans change hands, such deals are still relatively rare as lenders typically tend to hold the debt till maturity. Some market participants also worry that the trades would undermine the value proposition of direct lending, including the convenience of dealing with just a handful of lenders, the ability to keep details of loans private, and the price stability that results from a lack of trades. Trading can also be difficult as direct loans usually can’t be exchanged without the approval of the debt’s agent.

However, investors looking to shed positions due to liquidity constraints or a desire to free up capital for new investments may find the option to make private trades advantageous. As the private credit market matures and more debt falls into distressed territory, some holders may also see secondary trading as a way to move out of credits they no longer wish to own.

JPMorgan recently sought to broker trades in the debt of Pluralsight Inc., a struggling workforce development company, Bloomberg reported. The bank also marketed direct loans tied to fintech firm Finastra Group Holdings Ltd., a Vista-owned company that received about $4.8 billion in debt from private credit funds last year, and software maker Zendesk Inc., which received financing for its buyout in 2022.

(Updates with context throughout.)

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