Blackstone is looking to more than double its $40 billion systematic credit business, which uses models to crunch data and build portfolios. “This can and should be a $100 billion business if you look at us compared to other large traditional discretionary fixed-income managers,” Adam Dwinells, Blackstone Credit & Insurance’s head of corporate bond strategies, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Jean-Yves Coupin in this episode of the Credit Edge podcast. He expects systematically managed portfolios to rise to 20%-25% of the market, matching equities, from about 1%-2% in US corporate credit now. “You could certainly see something on that order of magnitude in credit eventually. Maybe not over the next couple of years, but over the next decade,” he adds.

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More private investors in distressed companies are looking to replace directors and take control, according to Kirkland & Ellis. “It’s a very important remedy — it candidly drives a lot of negotiation when things are distressed,” H.T. Flanagan, a debt finance partner at the law firm, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s David Havens in the latest Credit Edge podcast. “I have seen folks explore this with greater frequency and execute it with greater frequency,” says Flanagan, who advises private debt funds and alternative lenders. They also discuss the outlook for liability management exercises, hybrid capital solutions and opportunities in defense, aerospace and financial services.

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Magnetar Capital is scouring a $600 billion pile of troubled corporate bonds and loans for value as much of the debt comes due. “Yesterday’s buyout boom is today’s credit opportunity,” Austin Camporin, head of special situations at the $17 billion alternative asset manager, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Negisa Balluku in the latest Credit Edge podcast. “It’s those small firms that incurred debt in the zero interest rate environment, primarily in the broadly syndicated loan market, that are obviously having a harder time,” Camporin says. They also discuss private credit risk and investment opportunities in software, healthcare services, building materials and packaging.

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Lumen Technologies is reducing leverage and reinventing itself as an AI play after completing one of the biggest-ever out-of-court debt restructurings. “We had to keep as many winners as possible if we were going to be able to pull this off,” Chris Stansbury, the company’s president and chief financial officer, tells Bloomberg News’ James Crombie and Reshmi Basu and Bloomberg Intelligence’s Phil Brendel in the latest Credit Edge podcast. “It was a moonshot and it worked,” Stansbury adds. They also discuss capital-expenditure plans, a copper-scrap opportunity worth “hundreds of millions of dollars,” and Lumen’s exposure to the AI backlash.

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High global government yields are a growing threat to corporate debt markets, according to London-based hedge fund Andromeda Capital Management. “You either have to let long-term yields go up — and with that you can cause a credit crunch, especially with all the AI borrowing that’s happened — or you let the currency depreciate,” Alberto Gallo, the firm’s chief investment officer and co-founder, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Stephane Kovatchev in the latest Credit Edge podcast. “We might have already hit some icebergs with government bond yields going so high,” says Gallo, who compares the situation to the Titanic disaster. They also discuss winners and losers from the artificial intelligence boom, private credit contagion and why Japanese inflation matters.

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Columbia Threadneedle is looking to outperform by buying into the flood of debt from companies building artificial intelligence infrastructure. “It’s really the best place to try to find some volatility and some alpha opportunities here, as long as you can remain nimble,” Tom Murphy, the $715 billion manager’s head of investment-grade credit, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s David Havens in the latest Credit Edge podcast. “If we start to see all of this investment turn into cash flow, it could really be tremendous,” he says. They also discuss fundamental and technical credit market indicators, the September issuance rush and relative value in financial sector bonds.

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Massive borrowing by artificial intelligence companies — some of it to fund their own customers — risks inflating a technology-sector bubble, according to Seaport Research Partners. “Things are going to get crazier,” Jay Goldberg, the firm’s senior analyst for semiconductors and electronics, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Robert Schiffman in the latest Credit Edge podcast. “All this debt is coming on stream, it’s going to amp up things even further — this feels to me like 2007,” Goldberg says. “There are certainly corners of the industry that are prone to blow ups.” They also discuss AI vigilantes, concentration risk and growing anxiety about circular financing.

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BMO Asset Management, which oversees almost C$300 billion ($218 billion), has cut its junk-bond holdings and moved into safer parts of credit as geopolitical and macroeconomic pressures mount. “We love the movie — we’re still there — but we’re just getting a seat closer to the exit,” Earl Davis, the firm’s head of fixed income and money markets, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Spencer Cutter in the latest Credit Edge podcast. “You’re not getting paid to hold as much risk here,” he says. They also discuss why the financial and energy sectors look attractive, how to play hyperscaler bond issuance and opportunities in Canada’s nascent high-yield market, including debt from commodity and defense companies.

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