YouSaid · the spoken record

Michael Zawadzki

lines on the record: 47
first: 2026-01-23
most recent: 2026-01-23
sittings or episodes: 1
sources: podcast

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“Look, first and foremost, the people we look to hire at Blackstone, incredibly hardworking, genuinely good people. Motivated by taking on more growing some of these like fundamental traits like. That is universal, and I think that will never change. I think in an environment where you're using more and more productivity tools, how do you interact with people? People want to do deals with folks that they feel like they can trust. They develop good relationships. How do you think forward around corners? These are the types of critical thinking and communication skills that I think are going to be even more valuable to layer on to all like the basic stuff we have always looked for and the people we bring into the firm.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“That's AI, basically. I think using AI to support that process, you know, where have market spreads moved? Okay, this company's performance was X. How does that translate into a mark? I think you will see, just like I highlighted on the investment process, I think you will see adoption of support tools, driving efficiency, driving accuracy, driving scale. At the end of the day, you still need a human at the end of that to make the decision. But I do think you'll see it incorporated more and more into our workflows.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, look, this is a huge focus for us, and I think I would be lying if I say we have the golden ticket today. But we have a lot of focus on this area. How do we make our business more efficient? How do we make it easier on our teams, whether it's building models, knowing what questions to ask in their due diligence process, data aggregation and analysis, all of this stuff is in motion. It's at various stages of development. And I think you will continue to see us lean into that significantly. It can never replace Investment decision, right? Sure. That's still going to be. Aggregate data so we can help our team see trends earlier. All of these things are in process and I think more and more you'll see higher adoption.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, we continue to see strong flows into the market, right? The product is doing what it's supposed to do, which is generate strong, consistent outperformance for clients relative to liquids. I think as long as you see that continue, you're going to continue to see strong flows across all of our client types, whether it's insurance, institutions, individuals.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Are you actually marking your assets? And so I think if you actually look at our portfolio, you will see a small subset of the book that isn't doing what we expected to do. And we mark those accordingly. I think that's healthy. I think that's good. I think that provides some buffer for our clients and will continue to use our third-party well-established process to continue to do so.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, a couple things there. First, I looked at a 20 year loss ratio, right? Like you can't hide that over 20 years. And I think those stats speak for themselves. Second, you're right. Like this question around valuations have been out there in private assets. And Blaston's been around for 40 years. We use a best-in-class process with third-party valuation providers. We mark our book every single quarter. And those third parties are the ones that are doing it. And we mark that to market. company fundamentals, market moves. That all shows up. What's funny to me is, you know, when we do see underperformance in an asset and we mark it down, which we do on our watch list assets, we get questions about that. People are paying attention to that, yet they are also asking us out of the same breath.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“which still feels quite good, even though it's not the same as it was three years ago, still feels quite good relative to where equities are valued today and other things in their portfolio.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, look, I think there's a couple of things there. First, you mentioned it, right? Borrowers do have choice, right? And so there is going to be some connection to where the liquid markets are. And over time, that 200 basis point spread for privates versus liquids has held and it holds today. And so I think that's one thing to watch. And I think that relative value point you made is the critical point. I think the second thing is, yes, you are starting to see more M&A supply, but we're still well off where we were five years ago. And so I think there's still a lot more room to run. And when I kind of step back and I look at the simple math of private equity dry powder versus private credit dry powder, private equity dry powder outstrips it five to one. Okay. And so I think there's still a lot more room to run in the supply equation. I think spreads today are pretty stable. And I think our clients earning that excess spread versus liquids, earning that absolute return.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the direction of travel broadly is the other way, right? The reason why our business has grown so much is because insurance companies have said, hey, Blackstone, you're really good at this. You've got a huge dedicated team. You've got tons of expertise. We can't replicate it. But that is company by company. And some continue to do some things in-house. Some have certain strategies where they have that expertise and they'll continue to do that in-house. And we're happy to complement in the areas where we can be additive. But I would say the overall direction of travel is a realization that We have built out this infrastructure, this origination team, this CIO portfolio management franchise, this asset allocation framework, and clients want to benefit from that.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“The best way to manage assets against those liabilities are safe, cash paying, contractual assets. Those assets are exactly what we originate in private credit. And that excess spread that we've been talking about throughout this discussion, 150 to 200 basis points for investment grade life-for-like credit, that is extraordinarily valuable for insurance companies versus just buying traditional liquids on the screen. And we've seen U.S. insurance companies adopt that in scale with a ton of success. And one of the big themes I see going forward is that same idea expanding to Europe, expanding to Asia, because it is such a strong fit for insurance company balance sheets, high quality, safe, contractual, long-duration investment-grade assets.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. Well, a couple points I want to really hit here. One is our business model in insurance, because it is different than some others, right? We don't have a captive insurance balance sheet. We don't originate insurance liabilities directly at Blackstone. All we do is act as a third party asset manager on behalf of insurance clients. That's what we do best. That's all we want to do. Brick, bride, brick. We built our client base. It's a fully open architecture model. All of our clients sit shoulder to shoulder. And so I think that business model is critical, right? We don't want to compete with our clients and we want to make sure that every single one of them gets a great experience with us. I think that's a business model question. And I think that's an important part of how we set up that franchise. The second piece is the why. Why are insurance companies seeking private credit capital? Well, in the case of a life insurer, you're writing a 40.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“The Blackstone credit ecosystem to know where are the best opportunities. By the way, that investment committee also includes senior representatives of Blackstone outside of credit. What are we learning in private equity? What are we learning in infrastructure that might influence this decision? The way we aggregate and monitor data, we now have one centralized portfolio company reporting system. And so anytime we see weakness in an area instantly, the entire team knows that and say, okay, let's pull back origination in this sector and let's lean into origination in this other sector. And so systemizing our data, centralizing our processes, being even more plugged into the themes we see more broadly at Blackstone, that has been a critical part of our journey. And I think a huge competitive advantage for us going forward.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“We had no horizontal layer, but what COVID taught us when we were all at home in our pajamas and the markets were going wonky, that we needed that connectivity. It would be really valuable if one piece of our business was really connected with the other piece of our business. And so we started building out our CIO office, which I lead as a horizontal layer to connect all of the dots and bring tremendous consistency across our teams. Five years on, that team is now 120 plus people. And what that team does day in, day out is unifying the fabric of every single one of our investment businesses. And so we have a single investment committee that whether you are a direct lending deal or an asset-backed dealer or a liquid deal, you go to that same investment committee. Same underwriting standards, same memo, but most importantly, the same people hearing the deals from all the different parts”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“I love this question. So, as I think back at the history of our business at Blaston and Credit, obviously we've seen tremendous growth. We've seen tremendous success. A big turning point for me personally was COVID because up until that point in time, we ran each of our businesses almost as verticals, right? Whether it was direct lending or asset-backed finance or liquid credit, we had PMs in each of those businesses and they ran each of their businesses from raising the capital to investing the capital to manage the team almost as a vertical entity.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“It is bigger than anything, I would say that we've seen over the last several years. The bank's desire to partner with us where they keep the client arrangement, they keep the servicing, we keep the asset. We are seeing that as a global dynamic, especially around some of these longer duration asset classes, these hard asset asset classes. And those are the exact things that our investors want. And so I think that partnership opportunity will continue to grow.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“That one's gotten a lot of attention. I've spoken to a lot of my friends at the banks recently. I think the reality is on new direct lending deals, the market, and by the market I mean the private equity sponsors, they've largely spoken, right? Like speed, certainty, flexibility, customization, all the stuff I hit on. A really good thing for them, especially when they're buying a company and they're in a competitive auction process, even deals that met the leverage loan lending guidelines that were in place over the last two years, 85% of them were financed privately, right? So even when you had complying deals, borrowers were still choosing private credit. I'd say today our partnership opportunities with the banks, particularly on the investment grade side of what we do.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Asset classes within credit to build a diversified, resilient, higher yielding portfolio that allows me to pivot to the best opportunities in the market wherever they may be.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Diversification, right? Most of our clients have a lot of credit risk, corporate credit risk, excuse me, corporate risk in their portfolios, whether it's private equity or on the credit side. What about real assets? That's why asset-backed finance, that's why investment grade have been so convincing for so high conviction for our clients because it offers that diversification. It offers that access to real hard assets that are downside protected versus corporate risk. And then I would say the other big theme for our clients around the world is something we call multi-asset credit. It is this notion that credit as a whole is a place I want to be deployed into. However, I'm also recognizing the fact that markets ebb and flow where one market within credit is attractive, one might be less attractive. How do I partner with someone like Blackstone across everything we do over a dozen different”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Especially in an uncertainty. Everyone loves yield, right? Everybody loves yield. And I think even with spreads tighter and with rates coming off a little bit, even with that, the yield in credit relative to the earnings yield of the S&P is as attractive as it's been over a very long period of time. So credit remains attractive. I think when valuations are expensive,”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, anytime you tend to see some of the press that you highlighted, it's natural to get questions. And we embrace those questions and we address them with the facts that I just highlighted. I think for us, we continue to see very strong demand for credit. I was around the world, I think, twice in the fourth quarter, meeting with our clients around the world. And I would tell you, in aggregate, they want more private credit, right? Our institutional clients, I think year-to-day through 930 inflows were up over 50% versus where they were a year prior. We held a forum with many of our big clients late last year to discuss relative value and risks in the credit market. And actually, it was great for me because it was a way I could actually survey our clients on their views. And I would tell you they continue to be very bullish on private credit if anything they feel underallocated to private credits and asset class. And so I think momentum will.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“I would tell you that because the demand for capital is so significant and bigger than the supply of available capital, when you see that happen, you see spreads tend to widen. That's a healthy thing. That's a good thing for the markets. And I think some of those deals that don't have the protections that I highlight, they have a harder time getting done in the credit markets and you see them get funded in the equity markets. I think both of those things are healthy. I think when I take a big step back. There is a lot of chatter about this market, but we are firm believers in the impact of AI. Sure. And I think the bigger risk is underestimating the impact of it on your broader portfolio, like I was alluding to before.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, I think the nature of the risk matters, right? I don't want to paint it with a broad brush because you hit it. The type of collateral matters, who your counterparty matters. For us. Whether we're financing chips, we're financing a data center. We don't want to take residual value risk, right? I don't view that as credit risk. So if I can invest in chips, if I can invest in a data center that has investment grade counterparty risk, and my debt will fully be repaid inside of that contractual agreement, whether it's triple net or whatever. And I don't have to take residual value risk. I don't care what that data center is worth in year 25. I don't care what those chips are worth in year seven. That's really good risk. I think when you confine it to that, which is what we are doing, I think that's quite attractive. Will folks take that next layer of risk? They might, but you need to make XP to return.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, you will see defaults, but the question is over time, what is the loss experience for investors? And that's something I think we have a lot of conviction in.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there's two pieces I want to unpack there. One, this whole notion of liability management. It really is a public market phenomenon, and it exists in the public markets because publiccredit documents are really weak, right? It don't have the same covenant protections that you have in private credit. And so you can have debt layered in front of you. You can have collateral strip. That's what's happened in a lot of these situations in the public markets. Fortunately, in private credit, the documents are more protective. And so I think you will see less of that aggressive behavior in the private credit market certainly versus the public credit markets. The second thing I would say, Tracy, is The default is just the beginning. What really matters to clients are losses, right? Because the strength of a private credit document allows you to get to a table and negotiate with the owner for maybe more equity. Sometimes we have to take control of the company and we can use all of the resources of Blackstone to improve that company and actually deliver a strong outcome for our clients. And so I think those are the two points I would focus on.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“More dispersion, which is a good thing if you think about all established asset classes, you have top quartile managers and you have bottom quartile managers. And so I think the asset class will be a lot more about who is better at originating deals, who is better at managing challenges in their portfolio, who has the broadest aperture to identify areas within credit broadly defined where clients can deploy where there is excess spread, where there is better risk adjusted returns. I think that's the era we're heading into. And I would say we strongly embrace that era.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Markets that is durable. The way our clients access private credit and all of these new areas beyond direct lending were at the very, very beginning of that very, very long road. And so I think the long-term thesis for private credit is intact. By the way, you don't see massive waves of defaults outside of recessions. And it doesn't feel like to me we're headed into a recession. When I look at corporate”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“So, here's what I see. First off, what I think will happen in the market is that you will continue to see private credit grow and you will continue to see strong private credit performance. That said, you're right. If I look forward versus looking back, I think it's reasonable to believe that you will see more dispersion in the asset class. You will see some players underperform. You will see some players have higher losses. I don't think that means the entire asset class will face challenges because the model, like we started with that Amazon analogy, that still persists. The excess spread versus liquid.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Some of them are going to have issues. That is normal. If you look at the long-term default rate in the leverage loan market, in the public high yield market, it's 3%. These things happen. We account for them in our underwriting. We account for them in how we mark our portfolio. And most importantly, we have the resources to deal with those situations. We have operating people. We've got a big workout team. And if we do have challenges in our book, I think to your point on scale, Joe, having the strength of Blackstone, the resource and intellectual capital of Blackstone to actually support those companies and drive good outcomes for our investors over term, that's what matters.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“You can look at the fact that realized losses over that 20 year period for the industry have been 1%. And so I think we look to the data, we look to the clarification, but then I think the last thing that's also important to highlight here is Faults happen in southern Best with great credit. I think this is the other thing that I think gets missed. People see a headline about a credit issue. We have thousands of credit in our portfolios.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“I would tell you when all of that was going down, we were scratching our heads. And the biggest reason we were scratching our heads were all of those examples were bank-led bank syndicated, bag underwritten deals that somehow got confused with private credit. And this is the biggest frustration for us because we looked at those deals and we said, hey, one of the advantages of private credit is you can actually do private level due diligence. You can get access to management team. You can do weeks of work. You can get private access to information. And so one of our observations there was there was this misconception and that's why we think it's so important to continue to educate on the distinctions between public credit and private credit and those situations where public credit. I think the other thing that I think people maybe don't appreciate is while private credit has gotten a lot of attention recently, private credit's been around for a long time. You look at 20-year returns in private credit and you can see that they've outperformed liquid credit by several hundred basis points over 20 years through cycles. Also,”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Call this company and say, You should do a private loan. And that's where the idea Asian comes, and that's where the differentiation in the market comes. A lot of people can pick up the phone. Not a lot of people can create their own ideas and actually effectuate them. And I think that's something we're uniquely good at.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Other thing that's really important, and you asked this question around how do we scale a business? Part of it is not just waiting and sitting for the phone to ring. A huge part of what we do is think about the thematic areas within all of Blackstone, not just credit, that we want to deploy capital in. And Digital Infra energy and Power, those are good examples in the investment grade space. But there are also examples on the sub-investment grade space, life sciences, utility services. And what our team does is we proactively identify these companies and pitch them customized solutions. And because we have the scale of capital to actually solve that problem, we can do that. We did a deal late last year with a company called Signant Health in the Life Sciences space, a billion dollar plus transaction that we led. How did we do that? Well, we had financed their number one competitor. We had followed this loan because we had held it in our liquid book. And so we had the idea, hey, look.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“80 basis points. If you can make 250 basis points in like for like credit rated risk, like that's a lot of relative excess spread. And that's happening because the demand for capital relative to the supply of capital is quite attractive. And that's showing up for us as lenders. I'd say in the direct lending market, that's a market where spreads have tightened in sympathy with the liquid sub-investment grade markets, but the excess spread remains, right? That excess spread of a couple hundred basis points persists. I think what is helping is you are seeing this increase in deal activity. We saw very strong M&A activity in the back half of last year. If I look at our Q4 pipeline, it's actually up 25% versus what it was at this time last year. And so I think we are optimistic about a strong recovery in deal activity. That will help, on your point, in terms of sourcing deals in that market specifically.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Take it market by market, right? We were just talking about private investment grade, corporate solutions, some of these big infrastructure credit areas. I would tell you in that market. There is more demand for capital than there are players like Blackstone with the scale to actually meet those needs. And so that is a market where I would tell you.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“With public investment grade companies. And so recently we did a deal with Rogers up in Canada where we did a $5 billion financing for them against their network infrastructure backhaul. We then did a deal late last year with Sempra infrastructure to help them build out an LNG project. And we're seeing that not just in the US, we're seeing that globally. We announced a deal yesterday, in fact, with Ahold, the European supermarket company, to help expand their logistics footprint. And so I would tell you the biggest theme I see across our private investment grade business is this notion of what we call corporate solutions.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, I would tell you it's a material portion of what we're doing because it is such a capital intensive. Credit intensive part of the market. But when I think about everything we're doing across our business and credit, It doesn't screen as something that's significantly overweight. Like if I think about what we're doing in our private investment grade business, that's a real asset strategy broadly defined, right? That includes obviously digital infrastructure and includes energy and power, but it includes residential mortgages, which is a massive asset class. It includes equipment finance. We just announced a deal recently to do an aircraft engine partnership. And frankly, I'd say the single biggest thing that it includes Is what we call corporate solutions. And these are large scale customized private credit partnerships.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. Look, we have over $500 billion of assets in credit at Blackstone. And I would tell you like the amount of direct data center exposure is a small minority of that. It would not rise to the level of something where any of our clients would feel like they have concentration.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“We're looking at it all, and we have been looking at it all. And this is part of working at Blackstone, right? Like we have unbelievable insights into what's going on all around the globe in all of these markets, not just within our credit business that has 5,000 plus borrowers, but our private equity business, our infrastructure business, our real estate business. We happen to own a couple of the largest data center developers in the world. We have a huge operating team that helps companies implement AI capabilities, help them play offense and defense when needed. And so we leverage all of these resources. And I think about AI impact across almost every business in our portfolio to varying degrees, but I think you have to be front-footed in thinking about that as an investor.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, that's a fascinating question, right? Because I tend to think about AI exposure pretty broadly, right? Because I think AI will impact not just Data centers and the You know, first derivative impact, but the second derivative impact, the third derivative impact.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, sometimes there's a construction element. So you need to fund over time as opposed to funding all of your capital day one. That's a good example, right? Sometimes you need to structure it in a certain way in terms of the timing of the cash flows. That's another example. So there are things that are needed that don't necessarily increase credit risk, but they don't fit the cookie cutter mold of a straight away investment grade public bond.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Customization speed. Certainty, flexibility bringing that solution direct to the borrower. Sometimes there are certain elements in terms of the timing or whatever the case may be that requires a private solution confidentiality.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Meaning, think about a triple net lease contract, no matter what your usage is, no matter what your operating costs are, you're getting a fixed sum every single month from your tenant and they can't get out of that contract. Okay. Okay. And you're getting that from some of the highest quality credit counterparties in the world, right? Hyperscalers are the tenants in Most of the data centers today. And so as I sit with my credit hat on, if I can lend against some of the best counterparties in the world, against a known-defined stream of cash flows, and I can do that with 150 to 200 basis points of excess spread versus like rated public credit.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think that's a big part of it, right? Anytime you see a significant need for capital, which we obviously see in the data center build out and then connected to that, all the energy, power, and infrastructure that needs to accompany that, you see huge capital needs and markets that need that much capital need to access all available options. And that includes public credit, but that also includes private credit. Morgan Stanley put out a piece late last year that estimated that $800 billion of private credit alone is needed to finance the digital infrastructure buildout over the next five years. Okay. So that's a massive number. I think what gets missed when people think about the financing element of financing a data center, for example, is we're financing 15, 20-year taker pay contracts.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Funny, look, I've been doing private credit for two decades. I think back to the deals that we were first doing in private credit 20 years ago. And I would tell you, I don't know that a single one of them would pass our investment committee today. They were small, they were cyclical, they were basically the stuff the banks wouldn't do. Fast forward to today, think about the average direct lending deal we do. It's a $200 million EBITDA business. It's 40% loan to value, pre-GFC loan-to-values on deals were 65% plus. And so when I think about the risk posture of a senior secured loan today, it feels pretty good relative to history. And then that needs to be combined with the fact that this opportunity in investment grade private credit, I would say, is the fastest growing opportunity we see in credit at Blackstone.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Scale, right? The reason we couldn't do what we do today, 20 years ago, yeah, is because we didn't have the capital base. We couldn't write Billion dollar plus deal. Here's an interesting fact before 2021 there were only $5 billion plus private credit deals done ever. Since 2021, 100 plus, and we at Blackstone have done most of them. So what does that mean? We have the scale of capital to actually solve the problems for our clients. We have the breadth of teams to go out and cover the market and bring these solutions direct to our borrowers. And then the other thing that's happened is the expansion of private credit beyond what a lot of people think of it as, which is middle market sponsored back direct lending, into what we call the real economy, right? Taking what is a $2 trillion market today and thinking about a 30 plus trillion dollar addressable market when you think about areas like private investment grade, real assets, asset batch finance. And so the other big piece of this is just the massive expansion in the addressable market that's come about.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“All the syndication, all the trading desks, all the stuff that Led to leakage along the way. And in the process, you built something that was better for all market participants. If you're a borrower, you get to speak directly to your lender. You get a customized solution. You get speed, certainty of execution. If you're an investor, you capture all of that excess leakage in the form of higher returns. And that's been the case for the last 20 years. And by the way, if you're the financial markets, you have an ecosystem that is less levered, more asset liability management, brings more financial stability to the overall ecosystem. When you have something that's really good for all market participants, it tends to grow a lot. And that's what's happened in private credit.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, let's talk about a few things that have happened here. You know, I often get asked about this growth of private credit. And I think there's a misconception that that growth was driven by excess risk-taking. When you actually step back and think about what's happened in the market, you basically had a innovative breakthrough that changed the way business was done that was better for all market participants. The way I like to analogize it to is what happened with Amazon in the retail space, right? Before Amazon, if you wanted to go buy something, you had to go to the store. But Amazon kind of took out that middleman and brought you the consumer directly to the manufacturer. And in the process, created something that was simpler, more efficient, better for the economy, more transparent. What's private credit done? It's done the same thing. It's brought the borrower right up directly to our investors' capital. We sometimes call it this farm-to-table model, right? What have you done in that process? You've cut out all the middle.”
2026-01-23 · Odd Lots · Blackstone's Michael Zawadzki on How Private Credit Got so Big · IDENTIFIED FROM THE TRANSCRIPT · source