The Credit Edge by Bloomberg Intelligence CLOs Are Tough to Blow Up, Crescent Says
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Oct 2, 2025 John Fekete, head of tradable credit at Crescent Capital Group, shares insights from his extensive experience in corporate credit. He discusses the resilience of collateralized loan obligations (CLOs), especially those backed by middle-market borrowers, and why they're tough to disrupt. John highlights the current climate of manageable leverage, the growth of private credit, and emerging opportunities in healthcare and services sectors. He also explores the impact of recent interest rate cuts on borrowers, emphasizing the importance of smart manager selection in preserving CLO value.
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Defaults Are Idiosyncratic So Far
- Current default activity remains modest and mostly idiosyncratic, not systemic.
- Elevated defaults reflect sector pockets and the lagged effect of 2022 rate hikes, not a broad collapse.
Las Vegas As A Consumer Canary
- John recalls Las Vegas strip declines as an early warning of consumer stress in gaming.
- He notes consumers shift to regional casinos before broader leisure weakness appears.
Experience Keeps Casinos Relevant
- Online betting replaces some foot traffic but the broader casino revenue mix is experiential.
- Gaming revenue often includes half or more from non-gaming experiences that retain demand.