Credit Exchange with Lisa Lee Lessons learned from First Brands and Tricolor – Tetragon co-CIO Dagmara Michalczuk
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Nov 7, 2025 Dagmara Michalczuk, Co-CIO at Tetragon Credit Partners and expert in credit markets, dives into vital lessons from the bankruptcies of First Brands and Tricolor. She emphasizes the significance of governance in credit investing and highlights the risks of dealing with non-transparent firms. Michalczuk shares insights on the slow macroeconomic growth outlook and the critical role of AI in credit analysis. She warns about potential disruptions in various sectors and stresses the need for vigilant underwriting quality in a competitive landscape.
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Dual Track Defaults Mask Real Losses
- Default metrics hide a dual picture: hard bankruptcies are low but restructurings add material losses.
- Expect a prolonged tail of elevated losses via out‑of‑court restructurings around 4%.
Slow Growth Now, Fragile Reacceleration Later
- The macro baseline is slow aggregate growth with potential reacceleration next year from lower rates and fiscal stimulus.
- That positive outlook is fragile and creates divergence across borrowers and sectors.
Tight Spreads Amplify Underwriting Risk
- Tight credit spreads increase sensitivity to underwriting mistakes and compress risk‑reward.
- Spread compression exacerbates the need for precise risk pricing and disciplined positioning.